Did you know that you have the option to use your 401(k) to retire early? It’s possible, and Eric Cooper, who retired at age 47, is proof of that. Many people exploring financial independence and early retirement are interested in how to withdraw from a 401(k) early but are deterred by the substantial penalties. Eric, however, has been taking advantage of the 72(t) rule to make early withdrawals from his 401(k) of $30,000 per year since age 47.
In this podcast episode, Eric describes how the 72(t) rule works, the regulations to follow to avoid penalties, and why early retirement might be closer than you think. Additionally, Eric shares insights into his substantial real estate portfolio and the tax savings he’s achieved by combining tax-advantaged rental properties with the rule 72(t).
Eric also discusses how he built a multimillion-dollar nest egg by his mid-forties and how others starting young on the path to early retirement can replicate his strategy for a richer future. If you have money sitting in retirement accounts that you’re ready to use, the 72(t) rule might be the solution you need.
Scott: Well, with a setup like that, I’m going to withdraw from this podcast early. Mindy, BiggerPockets has the goal of creating 1 million millionaires. You’re in the right place if you want to get your financial house in order because we truly believe that financial freedom is attainable for everyone, no matter when or where you’re starting. Today we’re going to talk about what the 72(t) rule is and substantially equal periodic payments in the context of withdrawing money from retirement accounts. And we’re going to talk about an actual use case of this, which is so rare that we have found in Eric here out in the wild. So Eric, thank you so much for hopping on today. We’re super excited to chat with you.
Eric utilizes the 72(t) rule along with his real estate investments to fund his early retirement while keeping his income low to qualify for ACA subsidies. This strategic approach has enabled him to access his retirement funds early without incurring significant penalties, ensuring financial stability and flexibility in his retirement years.
*This content has been edited for clarity and coherence.
