475 | How to Access Your Retirement Accounts Before 59.5 | Sean Mullaney
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The Power of the Roth IRA Conversion Ladder in Early Retirement Planning
The Roth IRA conversion ladder is a powerful tool in early retirement planning. By converting money from tax-deferred accounts like 401k or traditional IRA to a Roth IRA, individuals can potentially pay minimal or zero federal taxes due to deductions and credits. This conversion creates a five-year bridge where expenses can be covered by taxable brokerage accounts or previous Roth contributions. With proper planning, individuals can withdraw funds from their retirement accounts tax-free, particularly benefiting married couples. The tax code incentivizes early retirement and utilizing strategies like the Roth conversion ladder can result in significant tax savings, making it an attractive option for those considering early retirement.
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