Please upgrade to the latest version of Flash Player.
Please upgrade to the latest version of Flash Player.
Please upgrade to the latest version of Flash Player.
Why You Should Celebrate Your 59 ½ Birthday
What did you get for turning 16 years old? Do you remember how you spent your 21st birthday?
How about your 59 ½ birthday? How did you celebrate? If you have not reached age 59 ½, what are you planning for it?
Nothing? I'm not suprised. Not many people celebrate age 59 ½.
But allow me to let you in on a secret…
The IRS is celebrating your 59 ½ birthday, with or without you.
Sure, they don’t bake you a cake or play “pin the tail on the taxpayer”, but they do give cause for celebration. 59andaHalf.com exists to help you understand why age 59 ½ should be one of your landmark birthdays.
Why Celebrate Age 59 ½?
Being 714 months (or 21,732 days) old may not seem significant, but it can mean BIG BUCKS to you. To quote IRS Publication 590:
Generally, if you are under age 59 1/2, you must pay a 10% tax on the distribution of any assets (money or other property) from your traditional IRA. Distributions before you are age 59 1/2 are called early distributions. The 10% additional tax applies to the part of the distribution that you have to include in gross income. It is in addition to any regular income tax on that amount.
In case I lost you, the 10% is an additional tax on your money. Not a reason to celebrate. But on the DAY you turn age 59 ½:
After you reach age 59 1/2, you can receive distributions without having to pay the 10% additional tax.
Let’s do some simple math . You are 59 years old and have accumulated $100,000 in your retirement plan. You decide to withdraw your entire balance, so you will be taxed on all pre-tax dollars with an additional 10% penalty. This means that even though your statement shows a balance of $100,000, your pre-tax, post-penalty balance is really $90,000. At $1 million, the penalty alone is a cool hundred grand.
However, six months later…you hit your 59 ½ Birthday. Where is your 10% penalty? Was its invitation lost in the mail? Did it forget to RSVP? Did it feign illness because it could not find you the perfect gift? It’s not going to show, because it no longer exists. Now your $100,000 is really $100,000, pre-tax. That’s $10,000 more simply because you’re age 59 ½. At 59andahalf.com, we call this Penalty-Free-dom™.
So, if you are turning 59 ½, step up and claim what is yours. Celebrate it. Own it. Invite your friends to your party and remind those younger that they are still in the 10% Penalty Zone . Make them wish they had their own Get-Out-Of-IRA-Free™ card.
Sample water-cooler conversation—
You at 59 ½: So, I’m putting in a swimming pool in my backyard this spring.
Co-Worker: Nice. Those in-grounds are expensive. Where you getting the cash?
You at 59 ½: From my retirement plan.
Co-Worker: Don’t you pay a steep 10% penalty on that?
You at 59 ½: Not anymore—can’t you read my 59 ½ birthday coffee mug?
Co-Worker: I wish I were 59 ½ like you.
Rejoice and be glad—you now have 10% more to spend. And besides someone bringing the bundt cake and one of our 59andahalf.com T-shirts, your new penalty-free status will be the best 59 ½ birthday gift you’ll receive.
Enjoy our website, and take some time to find that perfect gift for your 59andahalf-er™.
--Toby Meisenheimer, Founder, 59andahalf.com