FYI the November 120% federal mid-term Applicable Federal Rate is 6.11% for those of you who are ready to retire before age 55 from this company.
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@OP Thanks. I've been reading about CoastFIRE this past year with all the garbage going on with this company.
Since the other set of interest rates are causing my pension lump sum to go down I'm contemplating on leaving by years end to something less stressful and close to home.
Thank you for the post. Plan was retiring in two weeks, but now have reconsidered. This Middle East war seems to be spiraling,. Nothing good is going to come out of that only for inflation. With 40 trillion in debt, rising yields for treasuries, manipulation of stock market, record credit card debt and increases in interest rates, I believe this is going to erase of a lot of not most of my 401k and other investments. Seems like the media has done a great job minimizing all this for Americans. This system is waiting to break, and I would rather be employed than be relying on investments that are propped up on stilts. Layoffs are indeed coming to most employers. This company though, will be another RadioShack, Sears or ToysRUs. Executives are fleecing this company and kicking the can forward.
Thank you OP for posting this. Very informative.
@ap I know of three early retirement strategies to avoid the IRA and 401K 10% early withdrawal penalty:
1) Live on a combination of savings, Roth IRA contributions, and a Roth conversion ladder. Each Roth conversion is accessible penalty free after 5 years has passed.
2) Rule of 55
https://www.fidelity.com/learning-center/personal-finance/what-is-rule-of-55
"The Rule of 55 allows individuals to take penalty-free withdrawals from an employer’s workplace plan like a 401(k) or 403(b) account if they separate from service with that employer in the year they turn 55 or later."
3) Rule of 72(t)
https://www.fidelity.com/learning-center/personal-finance/72t-rule
"The Rule of 72(t) allows people to tap into their retirement accounts before age 59½ without owing a 10% early withdrawal penalty.
Payments must last for at least 5 years or until you've reached age 59½, whichever is longer.
Once you start a substantially equal periodic payment plan, it can't be stopped and can only be altered without a penalty under very limited circumstances."
If you are younger than age 55 and have the funds to retire or want to draw from your IRA and work a less stressful part time job, Rule of 72(t) is an option.
The fixed amortization method to calculate how much you withdraw from an IRA uses any interest rate up to 5% or 120% of the mid-term Applicable Federal Rate from the two months preceeding the start date of your 72(t) withdrawal plan. The higher the rate the more you can withdraw per year from the same IRA balance.
The IRS has released the November 2026 120% federal mid-term rate: 6.11%
Example:
53 year old, $1,000,000 IRA or Rollover IRA
Using 5% the annual withdrawal is $62,189.80.
Using 6.11% the annual withdrawal is $70,878.01.
You determine the size of the IRA you want to start 72(t) withdrawals from.
If you haven't done much research, talk to a CPA if you're F.I.R.E or Coast F.I.R.E ready.
Is it where you can take out funds for 5 years?
I suggest we wait for 73t==much better package and payout
whoever posted this thanks but please know many don’t competely understand your post completely
It something helpful is happening, it would be appreciated if you help us more clearly understand the impact. Thank you.