Anonymous
Post 05/18/2026 14:07     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:well, this was useful. because i started saving in retirement funds late, i never really considered that i might get to a point where i've over-saved. at 51, i now have $1mil in pre-tax retirement accounts.

basically i should 1) start putting at least half of my retirement contributions to Roth instead of just catch-up contributions and 2) retire no later than 62, because between pension, social security, and taking income from the 401k upon retirement we are still going to be in the 24% tax bracket.

i guess we'll see later if it makes sense to do any roth conversions.


Consider putting all of your future contributions into the Roth. Employer contribution always goes into the non-Roth. Also do a backdoor Roth.


my problem is that my spouse's income is entirely commission-based, so i can't easily predict what tax bracket we might end up in. gonna start at half and see how it goes next tax year. i have time.

of course if i do actually retire at 62, my then-teenager is likely to be severely displeased 😭


You can also do Roth conversions late in the year, but will likely need to file IRS form 2210 unless you qualify for the safeharbor exemption via withholding.
Anonymous
Post 05/18/2026 14:02     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:
Anonymous wrote:well, this was useful. because i started saving in retirement funds late, i never really considered that i might get to a point where i've over-saved. at 51, i now have $1mil in pre-tax retirement accounts.

basically i should 1) start putting at least half of my retirement contributions to Roth instead of just catch-up contributions and 2) retire no later than 62, because between pension, social security, and taking income from the 401k upon retirement we are still going to be in the 24% tax bracket.

i guess we'll see later if it makes sense to do any roth conversions.


Consider putting all of your future contributions into the Roth. Employer contribution always goes into the non-Roth. Also do a backdoor Roth.


my problem is that my spouse's income is entirely commission-based, so i can't easily predict what tax bracket we might end up in. gonna start at half and see how it goes next tax year. i have time.

of course if i do actually retire at 62, my then-teenager is likely to be severely displeased 😭
Anonymous
Post 05/18/2026 11:38     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Hard to belive 401ks accounts can be overfunded in your 40s. Remember, catch ups are not till 50 so you cant even put a ton in pre 50.


This. For us the taxable account is higher because we were capped on the retirement accounts. Now for us his is due to only one spouse having 401k access.


Not for me. I'm in my 40s. For some reason, I got the message that you have to max out your 401k every year starting in year 1, and that is what I did. It wasn't until years later that I started thinking about retiring early, and by that time, my combined retirement accounts were a large sum. In the interim I was maxing out 529 plans, and they are now fully funded. I just short changed myself on my brokerage account, and now I regret not saving more there from a younger age, as it would allow me to retire earlier. I'm hitting it hard now, but even with very high contributions, I'm not sure it'll ever surpass my 401k. The money you save the earliest grows the most!


Are you op? I am in a similar boat. We lived way below our means to max our 401ks. Now, I would like to use that money to live, but I am not "old enough."

The rule of 55 won't apply to me, I assume, because I run my own business. Very hard to use the rule of 55 in a world where layoffs happen so frequently and one is restricted to using funds from the 401K of the current employer.



OP here. PP was not me. Seems like there are a few of us in this boat!


The boat you’re in together — if you would take your blinders off — is Rule 72t. Google it. Read about it. Your money isn’t locked away from you. Get educated. If you were smart enough to make this money, be smart enough to know how you can access it.
Anonymous
Post 05/18/2026 05:59     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Hard to belive 401ks accounts can be overfunded in your 40s. Remember, catch ups are not till 50 so you cant even put a ton in pre 50.


This. For us the taxable account is higher because we were capped on the retirement accounts. Now for us his is due to only one spouse having 401k access.


Not for me. I'm in my 40s. For some reason, I got the message that you have to max out your 401k every year starting in year 1, and that is what I did. It wasn't until years later that I started thinking about retiring early, and by that time, my combined retirement accounts were a large sum. In the interim I was maxing out 529 plans, and they are now fully funded. I just short changed myself on my brokerage account, and now I regret not saving more there from a younger age, as it would allow me to retire earlier. I'm hitting it hard now, but even with very high contributions, I'm not sure it'll ever surpass my 401k. The money you save the earliest grows the most!


Are you op? I am in a similar boat. We lived way below our means to max our 401ks. Now, I would like to use that money to live, but I am not "old enough."

The rule of 55 won't apply to me, I assume, because I run my own business. Very hard to use the rule of 55 in a world where layoffs happen so frequently and one is restricted to using funds from the 401K of the current employer.



OP here. PP was not me. Seems like there are a few of us in this boat!
Anonymous
Post 05/18/2026 03:19     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Rule 72t
Anonymous
Post 05/17/2026 22:57     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Hard to belive 401ks accounts can be overfunded in your 40s. Remember, catch ups are not till 50 so you cant even put a ton in pre 50.


This. For us the taxable account is higher because we were capped on the retirement accounts. Now for us his is due to only one spouse having 401k access.


Not for me. I'm in my 40s. For some reason, I got the message that you have to max out your 401k every year starting in year 1, and that is what I did. It wasn't until years later that I started thinking about retiring early, and by that time, my combined retirement accounts were a large sum. In the interim I was maxing out 529 plans, and they are now fully funded. I just short changed myself on my brokerage account, and now I regret not saving more there from a younger age, as it would allow me to retire earlier. I'm hitting it hard now, but even with very high contributions, I'm not sure it'll ever surpass my 401k. The money you save the earliest grows the most!


Are you op? I am in a similar boat. We lived way below our means to max our 401ks. Now, I would like to use that money to live, but I am not "old enough."

The rule of 55 won't apply to me, I assume, because I run my own business. Very hard to use the rule of 55 in a world where layoffs happen so frequently and one is restricted to using funds from the 401K of the current employer.

Anonymous
Post 05/17/2026 11:12     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:Sure spend tax for the benefit of your heirs if you want. But that is different than the question of the tax bomb, Your money would have grown just as much if it was a tax advantaged account and you would not have spend the taxes for the conversion (and that cash could be growing now instead of sitting with the IRS).


DP. I’m not following you. The “tax bomb” is not about growth, it’s about the amount of taxes you will pay on RMDs. You can convert in early retirement, paying taxes in a lower bracket (usually 22% or less) reducing your RMDs rather than wait until RMDs that will be taxed at 32% (or higher).

It may not make sense for everyone but it does for us.

Anonymous
Post 05/17/2026 10:18     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Sure spend tax for the benefit of your heirs if you want. But that is different than the question of the tax bomb, Your money would have grown just as much if it was a tax advantaged account and you would not have spend the taxes for the conversion (and that cash could be growing now instead of sitting with the IRS).
Anonymous
Post 05/17/2026 06:04     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:Again this fear of RMD "tax bomb" is misplaced. They don't start until 75 now. The average life expectancy in the US is 79. You are paying a bunch more tax now to avoid some taxes for the last few years of your life.


well it really depends. We converted and sure we paid taxes (using SBLOC) , but it has also grown since conversion 20% and that is a tax free 400k so far.we converted way before our gap years. Also it will be much more lucrative for our heirs, especially since our withdrawal rate is predicted to be lower than our growth rate (we have a lot of income producing rentals)
Anonymous
Post 05/16/2026 21:18     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:well, this was useful. because i started saving in retirement funds late, i never really considered that i might get to a point where i've over-saved. at 51, i now have $1mil in pre-tax retirement accounts.

basically i should 1) start putting at least half of my retirement contributions to Roth instead of just catch-up contributions and 2) retire no later than 62, because between pension, social security, and taking income from the 401k upon retirement we are still going to be in the 24% tax bracket.

i guess we'll see later if it makes sense to do any roth conversions.


Consider putting all of your future contributions into the Roth. Employer contribution always goes into the non-Roth. Also do a backdoor Roth.
Anonymous
Post 05/16/2026 19:39     Subject: Anyone else dealing with this issue of "gap years" before retirement?
well, this was useful. because i started saving in retirement funds late, i never really considered that i might get to a point where i've over-saved. at 51, i now have $1mil in pre-tax retirement accounts.

basically i should 1) start putting at least half of my retirement contributions to Roth instead of just catch-up contributions and 2) retire no later than 62, because between pension, social security, and taking income from the 401k upon retirement we are still going to be in the 24% tax bracket.

i guess we'll see later if it makes sense to do any roth conversions.
Anonymous
Post 05/16/2026 15:19     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:
Anonymous wrote:This is a non-issue, but I see this problem here every so often. The key is Rule 72(t). Just google/AI it. It’s a section of the tax code that allows you to withdraw retirement money prior to 59.5 without paying the 10% penalty. However, there are stipulations, which are that you must draw the same amount of money each year for at least five years or until you’re 59.5, whichever is longer. Basically, it needs to be an annuity-type withdrawal. We setup a short-term, fixed-period annuity that pays us a fixed amount monthly, earns 5% interest, and ends at 59.5.

Separately, there are lots of other ways to use retirement funds before 59.5 and not incur a penalty. For example, you can pay college costs. We did that instead of a 529 plan.


I thought there was a 10% penalty for using it this way. How did you do it without the penalty?


Nope. Google it. Option has been available since 1997. Can pay tuition, fees, books, and even living expenses, if the student is at least half-time.

There is one catch relative to a 529. If all the college costs equal 90k, you can pull out the 90k without the 10% penalty. But, since you still need to pay taxes (assuming you’re withdrawing from a traditional IRA or earnings from a Roth) on the 90k, you’ll only have 60k (or whatever) available to actually pay for school.
Anonymous
Post 05/16/2026 13:51     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:

This is a complete non-issue.

You can withdraw from your 401k for a 10% tax to compensate the government for your tax deferral. Since you're account is so huge it's obviously cheaper than if you had paid taxes and uses a non retirement vehicle.


You’re missing the point.


No, you are.


You can be irritated, but we are talking about amounts like $5mill. Which, I agree, is a lot of money. I agree it's a first-world wealthy problem, but not maximizing that would be noticeable. Save your ire for the $100 millionaires and billionaires who are doing much worse than trying to maximize the use of the money they earned on a W-2.
Anonymous
Post 05/16/2026 10:43     Subject: Anyone else dealing with this issue of "gap years" before retirement?
Anonymous wrote:
Anonymous wrote:

This is a complete non-issue.

You can withdraw from your 401k for a 10% tax to compensate the government for your tax deferral. Since you're account is so huge it's obviously cheaper than if you had paid taxes and uses a non retirement vehicle.


You’re missing the point.


No, you are.