How to Take Money Out of Retirement Accounts Early - YouTube

Maybe your business is in a place where it needs  cash in the short term to keep the business  

operating, or you're looking to make an investment  with your business or start something completely  

new and you need cash to do it. Perhaps you're  looking at your retirement account as that source  

of funds for your business and today's video. I  really want go over the taking money out of your  

retire, an account early loan versus a withdrawal  and how to avoid the early withdrawal penalty.  

It is a really beautiful day outside. So  let's take this conversation out there. 

Here we are outside my office. The birds are  singing on this channel. I cover tactical,  

practical and spiritual techniques in business.  To help you get unstuck from financial stress  

and live in more congruency with money. If that's  for you, subscribe to my channel. I am a certified  

financial planner and I've helped hundreds  of people navigate the retirement accounts.  

Let's start with a type of retirement account that  offers the option for a loan. With a loan, you  

have the opportunity to put money back into the  account without out any taxes owed or expensive  

penalties. And the loan option will have you,  require you to pay interest on your loan, but  

that's nominal compared to taxes owed, or any sort  of penalties. The types of accounts that you can  

possibly take a loan from are 401k, 403b, defined  pensions and solo 401ks. The reason I say possibly  

is because every retirement plan writes their own  rules. They may have an option for you to take a  

loan, or they may not. Most employers do because  it adds that extra layer of security for employees  

to be able to take a hardship loan or some type  of loan for a home down payment, from their 401k. 

With a 401k, a 403b, defined pension or  solo 401k, you can borrow up to 50% of the  

account value or $50,000. Whichever is less The fastest way to find out, to see if the  

loan is an option from the 401k is to check with  the 401k provider. They will be able to tell you  

if the plan documents allow for 401k loan so that  you can set that up as well as your repayment with  

the nominal interest. And they'll tell you also  the interest rate that goes with, and paying back  

that loan. If a 401k loan is not an option  for you may want to look at the second best  

loan option. This loan option is called a 60 day  rollover, and that's what it is. It's very short  

term. It's 60 days. So within that 60 day  window, you need to put the money back. And  

the accounts that are eligible for this are  IRAs. Those are traditional IRAs, rollover IRAs,  

ROTH IRAs, IRAs are eligible for as well as  simple IRAs eligible for a 60 day rollover. 

Essentially, what that means is within a 12 month  period, you can take a loan from your account for  

60 days, use it for whatever you need and put the  money back within that 60 days, not a day later,  

because it's very strict timeline. And you're  going to want to check with your custodian of  

where your IRA is held, the process for that 60  day rollover. You're going to put that money back  

in within 60 days. If you can't put it back in,  put in as much as you can back into the account,  

what's not put back into the account will be, uh,  taxed as well as, penalized for early withdrawal.  

My suggestion here before taking a 60 day  rollover is to check with your custodian.  

The custodian is where your account is held.  Ask them about the process. You want to know  

the process on how they want the funds returned. Do they want it in check form? Do they want them  

sent electronically? And this will help code  your 1099R the tax document that is going to  

show that this was a 60 day rollover. If you  have any questions about withdrawal options  

from their retirement account, leave them in  the comments below, happy to answer them and  

hit the like button that this video is helpful.  So more people can see it. If you find that you  

need funds longer than 60 days, and you don't  have a 401k to borrow from consider your Roth  

IRA. So unlike a traditional IRA, a Roth IRA, you  can take out the contributions, the money that  

you put into the account tax free penalty free. So  let's take, for example, a Roth IRA worth $8,000,  

and you've contributed $5,000 over the past  few years. And the account value has grown… 

Sorry about that. The account value has grown  by $3,000 and get, you can take out the $5,000  

tax free penalty free. However, the remaining  $3,000 is subject to tax and to penalties.  

So you would want to leave the $3,000 in  there if possible, if you don't need it.  

So that's your really your last withdrawal  option without penalties. And then we move  

into the IRAs. You can take withdrawals from your  IRA, SEP a traditional simple IRA, rollover IRA,  

and your subject to the 10% penalty, as well  as any tax at your income tax bracket. So my  

suggestion here when taking out money from your  IRA is take it out in small increments. You can  

take out as many withdrawals as you want or need  over the year. There's no penalty for taking out.  

So many withdrawals from the  account, take it out as you need it. 

Those are the tactical ways to  take money, either loan or withdraw  

from your retirement account. I do want to make  mention of ROBS account. It's a type of strategy  

that S corporations use. You have to, you need  to be an Corp to use this strategy. You fund your  

company with your retirement account. It's usually  large quantities of money that are being used here  

with this strategy. I will link the IRS website  below. I highly recommend if you're going to go  

this route to have a CPA on your side and a tax  attorney, you don't want to mess up the strategy.  

You don’t to be subject to any sort of audit.  So it is a more complex strategy with the ROBS.  

And you'll find that link right down below if  having mindful money tips delivered to your  

inbox for you to navigate the tactical and the  spiritual side of money is supportive to you. 

Consider joining our newsletter. I go deep. I go  much deeper, on a weekly basis in the newsletters  

to our clients and our friends. So  I want to also, when it comes to  

redirecting money from a long term goal, like  retirement to something short, more short term  

often what comes up that with that is some  type of emotion whether it's fear or guilt or  

uncertainty, or maybe just curiosity any of those.  It's a really good sign. It's actually a really  

good sign because, you know, you have choice when  those come up, you know, you have, there's another  

option. There's another choice. So I want to offer  some support around the piece of navigating the  

uncertainty by using retirement funds. And that  is this, when you go on your meditation or a walk  

or something of that nature, and you're thinking  about your bigger vision for you and your business  

and your life, you're asking yourself, “what's the  next best step towards my goals and my vision?” 

And it may be to take a loan or a small  withdrawal from your account in the short term.  

That's okay. That's okay. You can do that  incrementally again, small bit by bit pieces,  

and you can ask yourself again, what's the next  best step, or please give me a sign universe,  

please give me a sign. And those are some of the  tools that we use inside Mindful Money Makeover,  

and one of the ways to really expand your wealth  container in the short term is to check out our  

training, our mindful money training. You can  find that link below. We go deep on how to  

expand our wealth container and the tactical  sides of money in running your business.  

I'll share one more tool with you. Eight  ways to succeed as a self-employed woman.  

It is a checklist I use daily to expand and to  grow revenues in business. And it's just been such  

a gift for me to be able to share that with you  as well. It has helped so incredibly much in, in  

supporting me and my team. So you can catch that  link down below as well. Thank you for watching,  

share this with a friend. Be sure to like  it, and I'll see you on the next video.