Ask any financial advisor about 72t and I’ll bet you’ll see them cringe.
It’s not a popular planning method, mostly because it comes with lengthy restrictions that, if violated, can you lead to severe penalties.
Clients don’t like paying penalties. Advisors don’t like when their clients pay penalties. 72(t) has the potential, if done wrong, for the clients to pay a huge chunk of penalties. See why we cringe about 72(t)?
Some of you may have no clue what 72(t) is. If you are not planning on retiring early (before the age of 60), then skip this post and come back another day.
If you are in the financial position to retire early, and have a bulk of your assets in retirement accounts, then 72(t) may be of help to you. Let’s take a look at the 72(t) early distribution rules.