EXIT STRATEGY SOLUTIONS
1. WITHDRAWALS
You can withdraw funds from your tax-deferred retirement account. However, early withdrawals before the age of 59 1/2 may result in a 10% penalty, in addition to income taxes due on the withdrawn amount. If you have reached age 59 1/2, you can withdraw funds without penalty, but the amount will still be taxed as income.
2. REQUIRED MINIMUN DISTRIBUTIONS(RMDs)
When you reach age 72 (or 70 1/2 if you reached this age before December 31, 2019), you are required to take RMDs from your tax-deferred retirement account. These distributions are calculated based on your life expectancy and the balance of your account. Failing to take the required minimum distribution will result in a penalty.
3. ROTH CONVERSION
If you want to move funds from a tax-deferred account to a Roth account, you can do so through a Roth conversion. This means paying taxes on the amount converted, but once in the Roth account, the funds grow tax-free, and you will not be required to take RMDs. This option can be particularly beneficial if you expect to be in a higher tax bracket in retirement.
4. LEAVING FUNDS IN THE ACCOUNT
If you do not need the funds immediately, you can leave them in the tax-deferred account, where they will continue to grow tax-free until you are required to take RMDs. This option may be suitable if you have other sources of income in retirement and want to delay taxes as long as possible.
5. ACCOUNT ROLL OVER
Roll over tax deferred accounts in a financial vehicle that can offer protection on the down side ,an uncapped potential on the upside, and guarantee income stream. This is to avoid payment of ordinary income taxes on future withdrawals.
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