Retire before 59½: fund the years in between
Money in a 401(k) or traditional IRA costs a 10% penalty, on top of its tax, if you take it out before 59½. FIYR's plan shows what pays for the years between when you stop working and 59½, and how the Roth conversion ladder or 72(t) payments avoid the penalty.
What you can reach before 59½
- Cash and taxable accounts
- Any time. Only the gains are taxed, at 0, 15 or 20%, and early in retirement they often fall in the 0% band: a married couple with no other income can take about $131,000 a year of long-term gains with no federal income tax (single: about $65,500).
- Roth contributions
- What you put into a Roth comes out any time, tax- and penalty-free. Growth waits until 59½.
- Roth conversions
- Pre-tax money you moved to a Roth can come out five years after the conversion, with no penalty.
- Pre-tax money
- 401(k), 403(b), traditional IRA: taxed as income, and 10% more before 59½, unless it comes out as 72(t) payments.
The Getting to 59½ card
When your plan stops working before 59½, a card on the FIRE page lists what pays for the years until then: cash, taxable accounts, Roth contributions, conversions at least five years old, 72(t) payments, and in red any pre-tax money, recent Roth conversions or Roth growth taken with the penalty, with the tax and penalties it all costs. Amounts are in today's dollars. If penalties are coming, it says what the Roth conversion ladder would save, with a button to turn it on.
The Roth conversion ladder
- Under Accounts & early access, turn on Roth conversion ladder.
- From the year you stop working until 59½, the plan moves pre-tax money to Roth each year, up to the top of the bracket under Fill the low brackets (12% by default: about $133,000 of income for a couple, $66,500 single, in 2026).
- Each conversion is taxed that year, paid from your other money. Five years later it can be spent with no penalty, so you need five years of cash, taxable or Roth contributions to start.
72(t) payments
With 72(t) payments on, fixed yearly payments come out of pre-tax money from the year you stop working, with no penalty: the IRS amortization method at 5% over your life expectancy then. They must carry on for five years or until 59½, whichever is longer. They start right away, but you can't change the amount.
Settings that shape it
- Gains in taxable accounts: how much of your brokerage and crypto is growth (taxed when sold). Half until you set it.
- Roth contributions: how much of your Roth balance is money you put in. Half until you set it.
- Where new saving goes: the Roth share of your 401(k), and Roth IRA dollars a year from what you save. The rest of your saving builds taxable money, which is what most early retirements live on first.
- Each account's tax type, under its name in Portfolio Assets.
Common questions
What is the 59½ rule?
Money taken from a 401(k), 403(b) or traditional IRA before age 59½ pays a 10% penalty on top of income tax, with exceptions such as 72(t) payments. Roth contributions and taxable accounts have no such rule.
What is a Roth conversion ladder?
Moving pre-tax money to a Roth each year after you stop working, while your income is low. You pay its tax then, at a low rate, and five years later each conversion can be spent with no penalty. FIYR converts up to the bracket you choose.
Should I use 72(t) or the ladder?
The ladder needs five years of other money before the first conversion can be spent, but leaves you free to change course. 72(t) pays from the first year but locks in a fixed amount for five years or until 59½. Try each on the FIRE page and compare the Getting to 59½ card.
How does FIYR handle RMDs?
From 73 (born 1951 to 1959) or 75 (born 1960 or later), the plan takes each year's required minimum distribution from your pre-tax accounts, taxes it, and reinvests what you don't spend.
Does FIYR know my cost basis?
No. Banks don't share it through account links. Set how much of your taxable accounts is gains under Accounts & early access; FIYR then tracks it as you save and withdraw.
Is state tax included?
Yes, as one rate you set under Withdrawal & tax: it applies to what you withdraw, not Social Security. It starts at 0%, right for states without an income tax.
Still stuck?
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