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The Retirement Rule Almost No One Knows About · The Jon Sanchez Show

• Jon G. Sanchez: Good Monday afternoon to you. Welcome to the John Sanchez Show on News Talk780K, which it's a pleasure to be with you this Monday, and what a pleasure to bring you the news that I'm gonna bring you if you have not seen what this market did. It was a record setting day. My goodness. All we needed was conviction, conviction, excuse me, conviction that this war was going to come to an end. And we hit a rally, just like I told you it was gonna happen. But, know, I always gotta bring the two sides to the argument, right? President said over the weekend, yep. Gonna have a deal. I said a Friday, actually, then over the weekend, reiterated a few times. Supposedly, a memorandum of understanding has been signed between the U.S. and Iran. And the official signing agreement is going to happen on Friday. Now, Friday, the market is closed for Juneteenth. So don't know if they planned it that way or is just a coincidence, but something I think everyone should understand. But what was interesting is this morning on CNBC, Vice President JD Vance talked about this entire round of negotiations, memorandum of understanding. But at the same time, he also talked of, and I'm not saying this negatively, but just figuratively, talked out of the other side of his mouth saying, but there's still a lot of things that need to happen. matter of fact, his his exact quotes were a lot of Iran's deals need to be still figured out, but the US has all the cards. And I thought that was interesting after, of course, all the optimism, which we know happens from our president. But then JD Vance comes out on on worldwide TV and says, Yeah, but you it's a preliminary deal that, quote, a lot of details remain to be ironed out, ⁓ but express confidence that America has all the cards and subsequent talks. Now, the Iranian foreign minister is expected to be involved in those upcoming discussions, as well as parliamentary leaders. A hardliner whose participation could signal that the regime's conservative faction is on board with the deal. Now, the agreement was reached yesterday, and I'll tell you what the show's about. Well, I just want to get this going. An agreement was reached yesterday that would extend the U.S. Iran ceasefire for 60 days. So here we go again, right? Here's the other thing. It extend ceasefire for 60 days. It would set up a framework for future negotiations about Tehran's nuclear program and other key issues. Now, I don't know about you, but I don't like this whole thing. I don't like that part of the negoti the the memorandum. That's why this war was started, supposedly, to make sure Iran does not have nuclear weapons. And then of course we saw the and heard the threat from the president last week. He was going to take over all the oil in Iran, which I've said from day one. That, in my opinion, is the entire reason, not the nuclear side, but the entire reason this conflict has begun. It's to grab all the oil. So think about that for a second. Okay, we've we've had 60-day ceasefires, and I would say for the most part, they worked up until the last, you know, I don't know, two to four weeks. So that was something new that the president, to my knowledge, has not said in any of his true social posts that it's a 60 day US Iran ceasefire. Right. Everything that I read, watched, heard over the weekend was we've got a memorandum of understanding. Things are going to be signed, and pretty much everything's going to be open. The space of Hormous is going to open and on and on and on. But now we know there's a 60 day time period to set up for future negotiations about Tehran's nuclear program. ⁓ senior US official told reporters later today that the president that ⁓ that President Trump, Vance, and the ⁓ Iranian negotiator. have already signed the deal in form of a memor in the form of a memorandum of understanding. And again, the official signing is set for this Friday in Geneva. Now the details of the agreement are going to be made public within twenty four to forty eight hours, another US official said. But Trump, after traveling to France for the annual G seven meeting, where he is now our G seven summit meeting, said he has expected that the memorandum of understanding text to come out sometime Friday. Vance told CNBC this morning that the deal's two major prongs are reopening the Strait of Hormuz and clinching a long term commitment that Iran will never develop a nuclear weapon. Again, Trump repeatedly has stated that the war was started in order to prevent Iran from obtaining a nuke. Vance indicated that if Iran abides by the deal's commitments, it will be rewarded with loosened economic sanctions and other barriers following Tehran's quote to be reinvited into the world economy. That said, I think it's a great day for the American people. Iranian state media today reported that Aragie said in a meeting, one of the negotiators, will probably take place on Friday. Probably take place on Friday in Switzerland, where the two sides will officially sign. Vice President told CNBC earlier this morning that despite the deal's 60-day timer, quote, our expectation is that the strait is going to be ⁓ opened in a toll-free way for the long term. That's the sort of thing we're going to figure out in these technical negotiations. There are a lot of very important details to figure out that we're actually going to sit at the table and discuss together and figure out a path forward, Vance said. Those to be determined details are not limited to the straight. Vance said that while Iran is committed to destroy and dispose of their stockpile of highly enriched material, the process of doing so has not been established. And what we've said is okay. Let's talk about how exactly we're going to do that. They want access to unsanctioned economy. We've talked about that. Okay, we're open to that. But that would require a long-term commitment to the inspection and verification regime imposed under the deal, he went on. So a lot of these details are going to be figured out during those 60 days of talks, he said. We feel quite confident that we're in a strong position. Okay, now why did I just waste your time going through all these details? Because Today was a prime example of how hungry this market, investors, I mean specifically, how hungry we are for some type of a deal, right? And this moved us, proposedly, step closer to that final deal being hap ⁓ happening. But again, there was no talk really out there today about all those details I just shared with you. You probably have not heard that at all. All you've heard is the headline that, hey, a deal has been struck, you know, basically the war is over. Not quite the case. There's a lot more details, obviously. But you know what? All we care about is the market reaction. And boy, what a reaction it was. Now, let me tell you what I have lined up for you after I give you today's record setting bit of information. You know, if you're thinking about retiring early, you're changing jobs, or you simply want to access that big chunk of cash, hopefully, that you have, that thing called a 401k or a 403B. If you want to access it penalty-free. You may be under the assumption that, John, you pounded into my head over the years that I can't touch my IRA/slash my 401k. So take my 401k, move it to an IRA. That's one option. Other option, leave the 401k behind. Third option, take it out, pay all the penalties, taxes, et cetera. Which for most people is never the correct option. But you pound it into my head saying, look, if I touch my money before 59 and a half, I'm gonna pay a 10% penalty. On top of it being taxable income. And that is correct. That is, unless you follow what I'm going to share with you today. see, I'm going to discuss what I've called the retirement rule, almost nobody knows about. And it's called Rule of 55. Now, what is rule of 55 that you're going to learn about today? Pretty simple. It's a IRS rule. That allows you, if you are between age 50 and 50, well, let me back up. you're non government like police, fire, there's a somewhat limited list They get to do this when I'm about to tell you, starting at age 50. For the rest of us, age be if you are between age 55 and 59 and a half, this rule that sits out there, that again, many of you may not be aware of. Does allow you, if certain rules are met and certain parameters are met, to take money out of your 401k. Now remember, notice how I'm emphasizing the word 401k, not IRA, forget about that. But it allows you to take money out of your 401k when you leave your company, again, between age 50 and 59 and a half, if certain rules are followed without paying the 10% penalty if you're under 59 and a half. So again, you to be between age Fifty-five to fifty nine and a half. And you gotta do it before you leave the company and go on to your next endeavor. So again, the retirement rule almost nobody knows about, but you will if you stick with me throughout the rest of the show. Let's take this first break. We'll come back and give you a market recap. Again, a record setting day, give you all the details behind it, and then we'll get into our topic. I Welcome back to the John Sanchez show on Newstock 780K, which happy hot Monday to all of you. My goodness, it is warm out there. right. Like I said earlier, quite impressive day There's no other way to say it. Very impressive today, to complete optimism across the board. And of course, I'm going to tell you how SpaceX performed in its full day of trading. All right, here's how we finished up for the session. We finished with a gain of 469 points on the Dow, point nine two percent to a record close of 51,671. The NASDAQ gained 795 points, 3.07%. was our close ⁓ the NASDAQ. Again, absolutely amazing. it wasn't a record. Our record's 27,190. And the SP for the session, it ⁓ traded on the upside by 123 points, 1.65%, ⁓ closing at 7,554. We gotta remind ourselves. I I was thinking about this this morning, when the futures were just going through the roof and I was doing my stock updates and I was thinking, My y remember the day and this shows my age when you know you would be up two or three hundred points in the pre-market session. It's like, ⁓ my God, that's gonna be a huge percentage move. ⁓ Well, gotta remind ourselves that, you know, we have a Dow sitting, you know, knocking on the door of fifty-two thousand, ⁓ Nasdaq on the door of you know, twenty-seven thousand. So, you know, ⁓ eight hundred point gaining the Nasdaq, yeah, three percent, that's nice. But ⁓ you know, Almost a 500 point gain in the Dow. It's only point nine two percent. Because again, this average is getting way up there ⁓ in price level. ⁓ anyways, strong day. Now let's go to the oil side. As you would imagine, oil was strong today. $3.98 closed at a barrel. We did one of my updates today, we did break below the 80 mark, but it only did a very short period of time. Heck of a for gold. Why? Because now traders don't have to worry about You know, the whole situation with the war and the impact on interest rates and so on and so forth. So they bid gold up today, $112, at $4,351.20 an ounce. And the bond market, she was a quiet one, down two basis points at all is all. And a yield of four point four seven percent. All right. stocks were strong. Anything that consumed oil, the airlines, ⁓ the ships, ⁓ meaning the cruise lines, they were strong. And we had, of an incredible day in SpaceX today. Now remember the stock was priced at 135 on Friday, or you know, started trading a couple hours into the day and gained $19 and some change on Friday. Well, it took off again today, no pun intended. 19.6% gain up $31.55 to $192.50 a share. My goodness. So total since that IPO price, about 40%. Not too shabby. That's gonna ⁓ you know Mr. Musk ⁓ well beyond the one trillion dollar. net worth status that he got on Friday. strength area in Nvidia. Very strong today. $7.26 gain, 3.54% to $212.45. ⁓ his 50-day moving average, which was $207.60. memory names did very well. Western Digital up $90.60, 16.1% gain to $653.53. Micron up $106.38. 10.84% rise to $1,087.99. Seagate Technology, another one, $87.76 gain up 9.43%. was very strong today. $26.50 rise, 4.67%, $593.48. Amazon, $7.55 gain, $246.10. You get the idea. The Mag 7 just doing amazing. DoorDash also ⁓ strongly. It a SP 500 standout today, up $17.51, ⁓ $11.63% gain $168.09. And then, like I said, the travel stocks did very well. do we set on a year-to-date basis now? Here we go for the year. The Dow's up 7.5%. Kind of a yawner there. NASDAQ, however, up 14.8%. So still got a ways to go to get back to where we were before last week, early last week's sell-off. SP's up 10.4% the ⁓ for the year. ⁓ But how about little guys I keep telling you about? Hope you heeded my advice a few weeks ago. And I said, make sure you're adding some Russell 2000, the small caps to your portfolio. Now up 19.5% year to date. So overall, like I said, very, very impressive day. kind of holding right now. So we'll what happens. Again, Friday's the big day where they're gonna sign the memoranda of understanding in ⁓ Switzerland ⁓ between and ⁓ I wonder who's gonna be signed. I wonder if the president's gonna show up there. I don't know. Can you imagine sitting across the desk from Iranian officials if you were the president? So I don't know who's gonna sign it. They haven't said yet, but that's gonna be interesting. He's ⁓ again the G seven meeting at this point. So he's already overseas. All right. With that said, I'm gonna get an early start in today's topic because again, this is a very, very important one. once again, let me kind of lay out the the for you, right? And make sure everybody's on the ⁓ on the same page. So as we all know, you know, when when we wanna retire or we lose our job, whatever the situation is where we've got to leave our employer, we find in a situation where, you know, if you're fortunate enough that if you quit on your own terms, hopefully you got another job lined up and ⁓ you know, gonna move right in and no big deal. You probably Roll your 401k into the new company's plan, or better yet, into an IRA if the conditions warrant, so on and so forth. But how about this? How about if you need to get your hands on that money? Right. Let's say you take an early retirement, right? A lot of people with the strength of the market, they're finding themselves in a situation where they're like, you know what? My 401k is growing enough. I'm gonna cash out. I'm going. I'm out. I'm gonna do an early retirement. Well, the general rule is this. The general rule is if you make withdrawals prior to age 59 and a half out of your 401k, assuming again you left the company, you're going to incur a 10% penalty. Okay. What I'm going to show you today is how we avoid that 10% penalty. Now the rule of 55, as it's called, creates a very, very important exception. This applies to employees who leave service during or after the year that they turn 55. Okay. Now, of course, this applies past 59 and a half. I'm just trying to give you a window. But yes, if you leave a company after 59 and a half, sure, the same rule of 55 applies to you. But again, the 55 represents the age, the earliest age you can leave. Again, as I'll share with you in moment, unless you're ⁓ first responder community and a few other areas, then you get to do it at 50. Not, you don't have to wait to 55. So what it does is it allows penalty free access to your employer retirement plans. But remember, income taxes will apply. So when we come back from this break, I'm gonna start with who qualifies, Who qualifies? Because now we're gonna get into some of the the kind of the nitty gritty of the rules. We don't want anybody to do something just because you heard it and know, you didn't follow the rules because it's ⁓ like said, it can be very expensive. Imagine you don't follow the rules, you take the ⁓ the withdrawal, you're let's say fifty six, fifty seven years old, and you go, end of the year when you get your ten ninety nine, I owe a ten percent penalty. Nope. Don't want that to happen to you by any means. So listen closely to what I'm about to say when I come back. And let's see if we can get you to retire a little bit early and avoid that nasty 10% penalty. Welcome back to the John Sanchez show on News Talk 780 KOH. Happy to be with you this Monday. I hope it's been a great one. You're trying to stay cool out there. again, a record setting day for the Dow Jones Industrial Average. We finished with a gain, if you can believe this number, folks, 469 points, 0.92%. But the real star of the day was the NASDAQ with a 795 point rise, 3.07%. SP up 123 points, 1.65%. Again, number one catalyst. President announcing yesterday that a Memorandum of understanding, better known as the MOU, has been reached with Iran. the deal is set to be signed in Geneva, Switzerland this Friday. It'll lay out a basically a 60-day ceasefire. A lot of the details, as I said at the beginning of the show, a lot of the details still are Even admitted by a JD Vance on CNBC interview this morning. A lot of details still unknown, but the market it very positively and obviously rallied the heck out of the market. ⁓ $3.98 pullback on oil, $80.90 is where we close. But as I said earlier this morning, we did break the $80 mark, just ever for a few short minutes. Okay, get back to ⁓ today's topic: the retirement rule that almost nobody knows about. So again, to kind of start for those of you that may have just joined us again, one of biggest misconceptions in retirement planning is that you cannot touch your retirement account until the magical age of 59 and a half without paying the 10% penalty. Again. That rule, and for most parts and generalities, it is true. But there are so several exceptions. We have another one called Rule 72T, which I'll cover again at some point. But one of the most powerful rules that many people are not aware of is called the Rule of 55. see, this provision allows certain workers who separate from service during or after the year they turned age 55. And again, I don't have time to get into the 50 to 55 group. That's the again. More of the public servant type of employees. Again, a whole other topic, but ⁓ the rest of us, we're gonna focus on 55. So again, during or after the year you turn 55, you have access to your employer sponsored retirement plan without that 10% penalty. Now, the is that many of you have never heard about this rule, right? Your advisors never talked to you about it. And maybe you out about it later after you've rolled the money into a 401k or from the 401k into an IRA plan, which at that point. To moot point, lost opportunity. The funds, as I'll share with you, have to stay in the IRA or excuse me, in the 401k when you implement Rule 55. So today I'm going to explain how it works. Again, who qualifies, what mistakes you need to avoid, and how it fits into your broader retirement slash income plan. once the general rule: you take withdrawals before age 59 and a half, you get hit with a 10% penalty. Rule 55, again, creates a very important exception. Now, this applies, as I said before, I went to break. This applies when an employee leaves service during or after the year they turn age 55. It allows for penalty-free, so you avoid that 10% penalty, penalty-free access to eligible employer retirement plans. Now, here's the first thing to learn: all plans allow this. Vanguard a study, and approximately 75% of plans that they manage, which they manage a bunch of them. Do allow this. So it's not a given your plan allows it. If this is something you want to do, obviously your first step is to talk to the plan administrator to see if Rule 55 withdrawals are available to you. And once again, as a reminder, I'm going keep reminding you of this: is income taxes still apply, right? No 10% penalty, but income taxes apply. So who qualifies for this? here's this kind of a simple list: retirees, employees who resign. Workers who are laid off, which is from my experience, one of the most common uses of this. accepting early retirement packages, which we're starting to see quite a few of those, especially in the technology space. And certain public safety employees, again, may qualify earlier that age 50. Let me give an example. So let's say you're an employee and you decide, hey, I've made it financially. I can afford to do this. I want to maybe change careers. I want to get out of what I'm doing, come back to something else a few years later, whatever the reason is. you quote, retire or leave your company at age fifty five. Let's say you're an executive, got an early golden parachute. You leave at fifty seven. Or God forbid you're laid off. And let's say you're fifty eight. Any of those people would qualify for the Rule 55, meaning they can have access to their entire 401k if the plan allows it and avoid the 10% penalty. Again, taxable income, no 10% penalty. So let's talk about some common mistakes. First of all, the first common mistake that I see people make is they roll the money from the 401k into an IRA immediately after leaving the employment. Now, that is a beautiful thing. That's the majority of our business matter of fact, right? I am not a fan of leaving old 401ks behind. They're out of side, out of mind. You got limited investment options, on and on and on. the situation warrants, and a number of questions we go through to make sure that it does, we recommend to a client to move their money from a 401k to an IRA. However, if again, between 55 and 59 and a half and they need access to that money, then guess what? This is where Rule 55 comes into play. And time permitting, I'm going to do a little comparison for those of you that may be going, wait a minute, this sounds and smells like substantial equal payments or rule 72T that I've covered a few times. It does. Sounds very similar, but there's quite a bit of differences. Let's go to mistake number two. You assume that all retirement accounts qualify. They don't, right? 401k, 403B, 457s, those employer-sponsor plans, if the plan allows it. Mistake number three. Not understanding planned distribution rules. I can't tell you how many people come to me and go, hey, my money's in an IRA. I want to implement Rule 55. Nope, can't do it. It's got to still be at the company. Failing to coordinate taxes and withdrawals, right? Hey, I've got my access, I've got access now to a big old pot of money. But remember, it's gonna be taxable income. No penalty under Rule 55, but taxable income, people forget that. How does this fit into your overall retirement income plan? Well, way to look at it is it's one component, right? The last thing in the world that I want to sit here and recommend is you tap that 401k, which again you saved and designed it for retirement. But life has changed. You need to get your hands on some money, whether it's for personal or survival right? A lot of times we deal with clients that have abruptly lost their jobs and they can't pay the bills. There's not enough money saved up. They got to get their hands on money. so this is where it really you know would would fit in appropriately. But don't look at it as this big old pot of money that, you know, is your piggy bank now. This is your retirement money. And nothing says that you can't use a portion of that 401k for 55 for the tax-free withdrawals, and roll over the rest of it, as you should in many cases, to the IRA account or to your new company's employer plan if you're gonna go to work for someone else. But it's one piece of the retirement income puzzle, right? So you got that now. You've got your taxable accounts, right? You take out dividends, maybe you sell some stocks or investments periodically, pay the capital gains, long-term, short term, whatever the case is, but that's another source of your income. Roth IRA assets, a great source if you've owned it for five years and you've been there for and you've had it for ⁓ excuse me, owned it for five years and you are over age 59 and a half. Remember, you can take your Roth gains out 100% state and federal tax-free. But remember. You always can take out your Roth contributions. Tax-free, penalty-free, it's your money, right? So people always forget that one when they get into a financial pitch. you get your hope, maybe some pension income, right? Not real common, but if you're a government employee, yeah, a lot of times you have that. Obviously, Social Security if you're of age, annuities, and part-time income, or my last one, of course, start a small business to bring you a little extra income. So you a lot of different retirement income sources. This again should be. One piece of the overall retirement income pie, not the entire pie. here's some questions to ask before you retire early. Do I qualify for Rule 55? Again, simple, you know, pick up the phone or send an email to your plan administrator and ask them. They'll know they'll bring up the plan documents and they'll be able to tell you yes or no. Again, we're seeing majority of plans do offer it. Second question you have to ask yourself before retiring is it's a pretty basic one. How much money do I need? Right? What's gonna be my inflow? What's gonna be my outflow? Once again, if it's structured properly, you've got multiple sources of income you've got assets that are non-correlated to the stock market. But how much income I need, once again, if you're interested in that, we got a really simple method for you to do that. Go to our website, SanchezGaunt, G-A-U-N T, SanchezGaunt.com, and pick up our risk request, I should say, our risk retirement income calculator. All you got to do is put the data in and it will tell you what your estimated cash flow is, pre-retirement, post retirement, investment income, et cetera. Answer all those questions. Third thing you need to ask yourself is what's gonna be my tax situation, right? I've seen it again over the years where people tap this money and they forget about the taxes, or there's a real bad one. It throws them into a higher bracket or brackets, right? All of a sudden you go. Hey, you know what? I'm gonna take the next year off of work. And let's say you're making a hundred thousand dollars a year on your job or two hundred thousand. And you hey, you know what? Heard this great idea with Sanchez on the radio. I'm gonna tap it under Rule 55. So you take out a couple hundred thousand bucks. Cool. No 10% penalty, but guess what? Here comes the tax bill. Could that jump you up into another bracket or multiple brackets? Absolutely. So very important that you coordinate with your f your financial advisor and especially your tax advisor to make sure you know you plan it from the income tax side of things. Another thing that you should ask now that you have access to some of this money is maybe I can delay Social Security for you for years. How are my healthcare costs going to be covered when I hit retirement? And what happens if the markets decline? That really is the most important out of anything. Just as a reminder, we've gone over this a million times. What happens if the market declines and your sole source or primary source of retirement income is coming out of that investment account or accounts, the IRAs, old 401ks, whatever the case may be. So You know, again, we find ourselves in a very interesting situation when we get to this point in our lives. I'll be honest with you, I have not had people. Gosh, I I was thinking before the show, how long has it been since I've had somebody talk to me about a rule 55 withdraw? And I bet it's been at least 10 years. Why? Because people are not adamant to retire early nowadays, right? Many of you want to hang on to your jobs for job safety. You haven't, whatever, maybe you haven't had a chance to save enough money. whatever the reason is. No one's really asking about this. The last time that I can recall that I I went through a lot of these in a scenario, was actually time periods. The most recent was basically the latter part of 09 and 2010 when the market rallied really hard after the Great Recession. Right. People were making money hand over fist, kind of like what they are right now. but the most important time was the dot-com era. I wish I had a dime for every person, every radio listener, every client, so on, so forth that said, hey, you know what? I know I'm only 50 or I'm 55, but I'm gonna retire because I am making so much money in the stock market. Look at if I keep growing at this rate, I can retire, you know, in the next year. Well, we saw how that one ended. So always as a reminder, this is we're we're in a great time period right now. We are so thankful we're in a great time period, but things can change at any point. And that's why you've got to be very careful and have a well-rounded retirement plan, well-rounded income plan, non-correlated assets, et cetera. Because as the saying goes, the party's not gonna last forever. And the last thing you want to find is yourself in retirement, solely relying upon your investment account to be your number one source of income. your account gets mismanaged, it goes down in value, whatever the reason is, and you go, ⁓ Again, if you heard me say this, what started as a six percent, four percent, five percent withdrawal when I retired, now is 10, 15, 20 because my accounts dropped in value. That's again when you find people going, uh-oh, I gotta find myself going back to work after I've been retired for X number of years. very, very important time period. But this rule fifty five, extremely powerful strategy that hopefully you've never heard of. But now you put it in your ⁓ your arsenal of things to do if you want to retire early. I'll come back with some final points on it. Welcome back to the John Sanchez show on News Talk 780 KOH. Once again, a stellar day in the market, thanks to ⁓ the proposed memorandum of understanding between us and ⁓ Iran. That's right. Big signing on Friday in Geneva. Finished up 469 on the Dow, NASDAQ surge 795 points, 3.07%, SP up 123 at 1.65%. All right, I've talking about a rule that many people are not aware of. I call it the retirement rule that almost nobody knows about. It's called Rule 55, as I've shared with you. ⁓ And it's a rule that allows us to take money out of our 401k if we leave our company for various reasons do a withdrawal prior to age 59 and a half and avoid the 10% penalty. But I want to go back and I want to emphasize I was thinking during the breaks a couple points I need to emphasize just to make sure everybody's clear because I've covered a lot with you. Remember, this is for 401ks or 403B. So for those of you that work for the government, teachers, et cetera, that's the 403B side. That's the the government's ⁓ of a four ⁓ one K. Okay. You have to leave the company. I want to make sure I emphasize this. You can't stay there and do this. You have to leave the company. Again, you must leave the company, you know, the service for retirement, off, whatever the reason is. So once again, 55 years old is the magical age. You have to be. You got to leave the company. And again, for those that work in the the sector, firefighters, so on and so forth, many them are allowed to do this at age 50. The rule only, only applies your current employer's 401k or 403B. It does not apply to IRAs. I want to go over this one more time. Many people think, hey, I'm gonna leave my company. I'm gonna roll over my half a million dollar IRA to or 401k to an IRA, then I'm gonna do it. Nope, you can't. Again, it has to be within your company's 401k. It's gotta be there. You have to have separated from service. laid off, quit, retired. Can't use this while you're still there. And your plan must allow this. Don't do ⁓ any this until you talk to two people. Your plan administrator to make sure it's fine. Secondly, talk your tax professional to make sure again, if this is gonna throw you into another ⁓ tax bracket. ⁓ to use the rule, yeah. Again, you have to leave the company in the most recent plan year. If you roll the funds into the IRA, nope, as I said many times, you're gonna get hit with that 10% penalty if you try doing this. here's a question I I remember I used to get a lot about previous employers, right? So you have a 401k from previous jobs, they do not qualify under this rule unless you have them into your current employer's 401k. So let's say you used to work for company A, company B, and you now work for Company C. let's say that you took companies A 401k, moved it into company B's, you took companies B's 401k, which is A and B, and you moved it into your current company, company C. Rule 55 works there, but you can't go back to company A or Company B and say, I want to implement Rule 55. Doesn't happen that way. gosh, think that's about everything I needed to cover. And and once again, just remember. This is not designed to go after your retirement accounts. This is really where I've seen it and I've used it with clients over the years most effectively, was when they lost their job unexpectedly. I got to do another show because it's been a while on another way that we we tap retirement money prior to age 59 and a half and avoid the 10% penalty. And goes by two names, substantial equal payments or rule which is the tax code. Again, that one it looks and smells kind of like Rule 55, but quite a bit different in a lot of different areas. That is one that we set up. Same thing. People need to tap money, retirement money, before 55, excuse me, before 59 and a half, and they want to avoid the 10% penalty. We set them up under this IRS rule, again called 72T or substantial equal payments. The problem with that one compared to Rule 55, once you start that, you get one chance to change your mind. But basically, once you start the rule 72 T withdraws to avoid the 10% penalty. You got to take the same amount out every year for five years, or you hit 59 and a half, whichever's longer, right? And a lot of times ⁓ it's the whatever's longer is is the case. So you change it one time. So whatever that withdrawal rate, typically you can go maximum of about six percent if the investments can handle it. ⁓ So say you had a million dollar IRA, take six out, that's sixty grand. You're stuck with that for five years, or he's fifty-nine and a half, again, unless you utilize that one time exception. But the problem If something changes where you need more money, again, you can't do anything about it. Something changes where you want to invest that lump sum into something different, something outside the stock market. Can't do it. So once you start rule seventy-two T, you're pretty much locked into that again until five years or fifty-nine and a half. Those are just again some of the some of the distinctions between that and rule fifty-five. But bottom line, those the really the two most common. And I'd say definitely 72 T is the most common. the two most common ways to access our money before fifty-nine and a half. You lose your job, scary, you need income. Now you got a couple of solutions to do that. If you have any questions, please give us a call at the office, seven seven five-eight hundred-eighted ⁓ one or online at SanchezGaunt.com. God bless, have a great afternoon. We'll see you tomorrow on the John Sanchez show.