72(t) Expert Tells All: No More Secrets About Early Withdrawals (Part 1) | Bill Stecker | 131
Catching Up to FI
Medical-expense exception mechanics and itemization
Bill explains medical-expense exception requirements, the 7.5% AGI threshold, and implications for itemizers versus standard deduction users.
One of the most frequent questions we get about retiring early is: 'How do I get money out of my retirement accounts before age 59.5, without paying the 10% penalty'? This episode answers that question and more with CPA and 72(t) expert, Bill Stecker. Bill is the founder of The Marble Group which specializes in federal income taxes and early retirement distributions. He's also the brilliant mind behind the website '72tcalc', hands down the most comprehensive resource we've found specifically focusing on 72(t)s. Cohost Jackie knows because she set up her own substantially equal periodic payments (SEPP) using IRS rule 72(t) in 2024 and will share some details of her first-hand experience.
If you've been fearful and confused about how 72(t)s work, fear no more! In this episode, we thoroughly break down everything you need to know in a way you've never heard before. We also discuss more than a dozen other ways the IRS allows you to legally avoid federal tax penalties for early withdrawals from your retirement accounts. To make sure we did this topic justice, we turned it into a 2-part series. This is part 1, and part 2 will be released next week; both packed with valuable insights and practical tips for anyone considering early retirement.
⚠️ Clarifications from this episode:
IRS ‘Rule of 50’ for public safety workers who retire after age 50 are exempt from the 10% early distribution penalty. It does include EMTs (Emergency Medical Technicians), however, it does not include all doctors and nurses (see IRS code linked below or read this article). For medical expenses, the 10% early withdrawal penalty can be waived without itemizing your deductions if the amount of unreimbursed medical expenses is more than 7.5% AGI. (see IRS code linked below or read this article).
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RESOURCES MENTIONED ON THE SHOW:
Free consultation with Bill Stecker’s Firm- The Marble Group
email: themarblegroup@wispertel.net
Phone: (312) 361-0221
Jackie’s review of 72tcalc.com website
Most recent IRS list of exceptions to 10% tax penalty on early withdrawals
IRS Tax Code 72(t)- Substantially Equal Periodic Payments (SEPP)
IRS Single Life Table- Effective 1/1/2022
IRS website with the listing of recent interest rates (120% of Applicable Federal Midterm Rate)
Rule 72(t) Example- Eric Cooper
Rule 72(t) Example- Dare to Draw Down
📱72(t) CALCULATORS
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⚠️Disclaimer: Our content is for general education and information purposes only. We are not providing financial, legal, or tax advice. Always do your own research or consult a professional before making important decisions.
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