How to Retire Early as a Tech Professional

As a tech professional, life can be stressful during your career. It is a dream to retire early to live a stress-free life, and that can very well be a possible goal. When wanting to retire early, you need to focus on the planning aspect more than the exact age you want to retire at. Continue reading to learn how to retire early as a tech professional.

Utilize a Roth IRA

A Roth IRA is funded with after-tax dollars to grow tax-free. While it doesn’t provide a tax benefit on the front end, you receive tax-free withdrawals on the back end. Another positive of a Roth IRA is after five years of having the account, you can withdraw your contributions, not earnings, for any reason. This means you will be able to withdraw from the account when you retire early and are not at the full retirement age to take out the earnings you have received.

To contribute directly to a Roth IRA, your gross income must be less than $144,000 for single filers or $214,000 if married and filing jointly. If your income exceeds these limits, you could utilize what is known as a “backdoor Roth IRA”. This is a legal way to get around the income limit that stops high earners from having Roth IRAs. It is a simple conversion that takes the contributions from a traditional IRA and puts them into a Roth IRA.

Recall the Rule of 55

The Rule of 55 is if you retire from your employer between the ages of 55 and 59 & a half, you will be able to withdraw from your employer-sponsored 401(k) or 403(b) penalty-free. However, this is only for these two types of employer-sponsored accounts, so be aware.

Consider Section 72(t) Withdrawals

Section 72(t) withdrawals are also known as Substantially Equal Payment Plans. With Section 72(t) withdrawals, you can set up a series of withdrawals before you turn 59 & a half years old. A few things to note are:

  • Substantially Equal Payment Plans apply to 401(k)s, 403(b)s, IRAs, SEP IRAs, and SIMPLE IRAs.
  • There are three formulas that can be used to decide the amount of withdrawals. You can only choose the formula used once so be careful when deciding.
    • Required minimum distribution
    • Amortization
    • Annuitization
  • A Substantially Equal Payment Plan is set up for a single account. If you want to have multiple, you need to make the change in each retirement account.
  • Your Substantially Equal Payment Plan needs to last at least 5 years or until you turn 59 & a half years old.
  • A Substantially Equal Payment Plan only protects you from the 10% early withdrawal penalty. You will still be taxed accordingly.

If you have been toying around with the idea of planning for an early retirement, contact us at Eagle Grove Advisors. Our advisors are experienced in helping tech professionals handle their retirement planning. Give us a call today to get started while time is on your side.


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