4 ways to tap your retirement funds earlier than normally allowed

Qualified retirement accounts can offer great tax advantages for people saving for retirement. Those advantages work incredibly well if you use them to save for several decades and then retire at age 59 1/2 or later, but if you need to tap your money early, the benefits can evaporate. For instance, while qualifying Roth IRA withdrawals are completely tax-free, early withdrawals of earnings from a Roth IRA can result in both taxes and penalties on those withdrawals.

Still, there are strategies you can use to tap into your retirement money before age 59 1/2. These four techniques will let you tap your retirement money early, gaining access to your cash if you need it before that traditional age.

No. 1: Separate from your employer at age 55 or later

While the standard age to tap retirement accounts without penalty is age 59 1/2, there’s an exception if you separate from service from your employer in the year you turn 55 or later. If you do, you can take withdrawals from your employer-sponsored retirement plan without facing the early withdrawal penalty. If you are able to take advantage of that rule, there are three key things to know.

First, the ability to tap that money early without penalty works only for employer-sponsored plans. If you roll the money into your IRA first, you lose that benefit. Second, if you’ve worked for more than one employer, it applies only to the specific plans of any employer you separated from in that year you reached age 55 or later. Third, the age 55 rule applies only to the early withdrawal penalty, not to any taxes you might otherwise face.

No. 2: Take substantially equal periodic payments

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