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Retirement Rules You Didn't Know You Needed to Know

Retirement Rules You Didn't Know You Needed to Know

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 Bill and Andy Bush dive into the retirement plan rules that trip up participants most often—from the Rule of 55 and IRS 72(T) distributions to SIMPLE IRA rollover restrictions, in-service distribution provisions, and the nuances of RMDs under SECURE 2.0. The brothers break down each rule with real-world examples pulled from recent client calls, covering when you can access your 401(k) penalty-free, why rolling into an IRA can cost you flexibility, how beneficiary rules changed under the 10-year distribution window, and what early withdrawal exceptions (including QDROs and disaster provisions) actually look like in practice. Whether you're planning ahead or reacting to a life event, this episode is a practical field guide to the rules that govern your retirement dollars. ⏱ Episode Timeline & Key Topics 00:00 – Welcome & Episode Setup Bill opens with a Spicoli quote from Fast Times at Ridgemont High and sets up the theme: retirement plan rules you may or may not have known about. 00:53 – The Rule of 55 If you leave your employer at age 55 or older, you can take distributions from that employer's 401(k) without the 10% early withdrawal penalty: · Must be the plan at the employer you separated from · Taxable, but no penalty · Rolling into an IRA eliminates the Rule of 55 protection 02:12 – IRS Rule 72(T): Substantially Equal Periodic Payments Starting at age 55, you can take early distributions from IRAs or 401(k)s using the 72(T) rule: · Payments must be substantially equal · Must continue for five years or until age 59½, whichever is longer · Andy shares a real client example of someone who used 72(T) after early job loss 03:30 – SIMPLE IRA Two-Year Rule SIMPLE IRAs carry a unique two-year restriction from the date of your first contribution: · Distributions or rollovers within two years trigger a 25% penalty (not the usual 10%) · Rolling funds into a SIMPLE IRA from a 401(k) or other source also requires the two-year window to pass · SECURE Act expanded allowable rollover sources, but the timing restriction remains 05:31 – Roth Five-Year Rules Roth IRA contributions can be withdrawn at any time tax- and penalty-free, but earnings have their own rules: · Earnings require the account to be open for five years and you must be 59½ or older · The five-year clock starts with your first Roth IRA deposit 06:43 – In-Service Distributions from 401(k) Plans You can take distributions while still employed, but the rules are plan-specific: · IRS default age is 59½, but your plan document can set a different age (examples: age 40, age 55) · Common reason: rolling funds to an IRA for income planning options not available inside the 401(k) · Building a retirement "income floor" can increase confidence and even lead to more spending in retirement 09:57 – In-Service Strategy: Roth IRA Consolidation Participants who already have a Roth IRA on the outside can roll Roth 401(k) funds into it via in-service distribution, consolidating accounts and keeping the five-year clock running. 10:20 – Required Minimum Distributions (RMDs) RMD ages under SECURE 2.0: · Born before 1960: RMD begins at 73 · Born after 1960: RMD begins at 75 · Still working and contributing? No RMD from your current plan (unless 5%+ owner) · Old 401(k)s from prior employers still require RMDs · IRA RMDs can be aggregated—take from one account to satisfy the total · 401(k) RMDs must be taken individually from each plan · The "Andy Bush Hack": roll old accounts into your active plan to defer RMDs 14:07 – Beneficiary / Inherited Account Rules Non-spousal inherited accounts changed significantly under SECURE 2.0: · Old rule: stretch over beneficiary's lifetime or take within 5 years · New rule: all funds must be distributed within 10 years · If deceased was already taking RMDs, beneficiary must continue annual distributions · Strategy: increase your own 401(k) contributions and offset with inherited account distributions 16:35 – Early Withdrawal Exceptions Several exceptions allow penalty-free early access to retirement funds: · Medical expenses exceeding a threshold · Disability · QDROs (Qualified Domestic Relations Orders) for divorce · Federally declared disaster provisions · Hardship withdrawals (still subject to 10% penalty if under 59½) 18:15 – Check Your Summary Plan Description (SPD) Every provision discussed is plan-specific: · Ask your HR or plan sponsor for the SPD ·...
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