New IRS rule offers higher penalty-free withdrawals for early retirees

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One of the pain points of early retirement is the limited access to your nest egg before age 59½ without incurring a 10% penalty. Although a new IRS rule makes it easier to use more money without penalty, you still need to weigh your options, according to financial experts.

Typically, pre-tax 401(k) early withdrawals or individual withdrawals from the retirement account incur a 10% penalty on top of the withdrawals, with a few exceptions, including so-called Substantially Equal Periodic Payments, or SEPPs. , a series of distributions for five years or until age 59½, whichever is longer. These payments are also called 72

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