Ever wonder how you can access your retirement accounts without paying the 10% penalty? In this video we share our plan for avoiding IRA and 401k penalties by setting up a Roth Conversion Ladder.
Credit is due to the MadFientist who introduced us to the idea. Basically you rollover your old 401k into a traditional IRA, then convert that to a Roth IRA. The converted funds are considered “income” and therefore “contributions” so you may withdraw them at any time (after 5 years has passed) without tax or penalty.
More information can be found on his website:
Interestingly, President Obama’s 2016 budget proposal might close that loophole despite the IRS just putting out notice 2014-54 which seemed to confirm this is a viable and lawful strategy.
Link to the IRS Notice 2014-54: