Are you sitting there trying to figure out all of those 401k early withdrawal penalty exceptions, So you can access your hard-earned money?.
Well, stay tuned because I am going to show you how you can access your 401K money without having to worry about those exceptions and there’s no penalty.
You guys, I was so excited when I learned this. And today, I am going to show you exactly how to tap into the 401K money that you have already earned and not have to worry about all of those exceptions.
Withdrawing from 401k
And I know because I did it and I even bought a boat with it and guess what? It is totally government-approved legit.
Like this is a seriously real thing so I want you guys to really pay attention. This is a game-changer.
How much is taxed on 401k early withdrawal
Now there are lots of ways to access your 401K money early but most of those involve figuring out if you fall into one of the exceptions. There are a number of them.
One of them is if you’re a first-time homebuyer, you can get access to your 401K money without paying that 10% penalty plus you do have to pay income tax on that money.
So we’re talking a huge amount of money if you want access to your 401K money. You’re going to give up a lot of it but I’m not talking about how to make sure you fit into one of the exceptions.
Also Read: First Time home buyer 401k Withdrawal
Early Pension Withdrawal Penalty Exceptions
Now many of you may already be aware but there is an avenue called a self-directed IRA and that is where you have control over your money and you can invest it in things like real estate or individual stocks if you choose.
And the self-directed IRA does not have a penalty associated with it at all but I’m not even talking about that because with a traditional self-directed IRA, while you can start or purchase a business, you cannot be an employee of the business and gain an income from it.
Also Read: Self-directed IRA Real Estate Pros and Cons
That is what I’m talking about. That is where you are going to actually be able to use your 401K money to put money in your own pocket. It is actually a sub-category of a self-directed IRA.
Now if you fit that category if you want to be able to access your own hard-earned 401K money and put it to work for you. So you can actually start getting an income on it now, then type in the comments below, I want my money! So there is a special category of self-directed IRA.
It is called ROBS, which is a Rollover Business Startup. Now, here is fundamentally how it works and this is why different from a traditional self-directed IRA. With a ROBS account, you can actually become an employee of the business you purchase or start and start paying yourself.
Generate Business for 401k
Now the income that you’re going to pay yourself that is generated by that business, that income is taxable as income tax but the 401K money that you already have and that was sitting there, that you rolled into this new ROBS account, there is no penalty involved with that and it is not taxed until you actually withdraw it, just like a traditional IRA or 401K.
So it allows you to use and access your own money to build your own business, where you can be an employee and actually get an income.
How it works is
It is a genius! Now the best way to explain how it works is to probably give you my own personal example that we did. So we had some money in a 401K but we really wanted to start up a business.
Now the business we chose to start is a sailboat charter rental business, which is awesome because now we have this really cool catamaran that we purchased with our 401K money, no penalty, no taxes assessed to it because we rolled it into this ROBS account.
And in that account, a corporation was created.
That corporation starts its own 401K and that is what purchases the assets for the business, in our case, the boat. Now to be very clear, this is a real and legitimate business. We really do have a boat. We really do charter it out.
Now the best part is that we can now be employees of that business.
So when it’s making money, we can pay ourselves and it is completely legitimate, completely above board and all we do is pay income tax on the income we generate.
But none of the other money that was used to purchase the assets or to run the business is taxed or penalized.
So, again, this is the option for you if you want to create or purchase a business and you want to be an employee of that business and actually get money every single month. And that’s what we do.
So now you know the secret that you actually can tap into your 401k Early Withdrawal Penalty Exceptions money, not be penalized and not pay taxes on it until you withdraw it later in order to start generating an income for yourself now.