Bill and Andy Bush dive into the retirement plan rules that trip up participants most often—from the Rule of 55 and IRS 72(T) distributions to SIMPLE IRA rollover restrictions, in-service distribution provisions, and the nuances of RMDs under SECURE 2.0. The brothers break down each rule withreal-world examples pulled from recent client calls, covering when you can access your 401(k) penalty-free, why rolling into an IRA can cost you flexibility, how beneficiary rules changed under the 10-year distribution window, and what early withdrawal exceptions (including QDROs and disaster provisions) actually look like in practice. Whether you're planning ahead or reacting to a life event, this episode is a practical field guide to the rules that govern your retirement dollars.
⏱ Episode Timeline & Key Topics
00:00 – Welcome & Episode Setup
Bill opens with a Spicoli quote from Fast Times at Ridgemont High and sets up the theme: retirement plan rules you may or may not have known about.
00:53 – The Rule of 55
If you leave your employer at age 55 or older, you can take distributions from that employer's 401(k) without the 10% early withdrawal penalty:
· Must be the plan at the employer you separated from
· Taxable, but no penalty
· Rolling into an IRA eliminates the Rule of 55 protection
02:12 – IRS Rule72(T): Substantially Equal Periodic Payments
Starting at age 55, you can take early distributions from IRAs or 401(k)s using the 72(T) rule:
· Payments must be substantially equal
· Must continue for five years or until age 59½,whichever is longer
· Andy shares a real client example of someone who used 72(T) after early job loss
03:30 – SIMPLE IRA Two-Year Rule
SIMPLE IRAs carry a unique two-year restriction from the date of your first contribution:
· Distributions or rollovers within two years trigger a 25% penalty (not the usual 10%)
· Rolling funds into a SIMPLE IRA from a 401(k) or other source also requires the two-year window to pass
· SECURE Act expanded allowable rollover sources, but the timing restriction remains
05:31 – Roth Five-Year Rules
Roth IRA contributions can be withdrawn at any time tax- and penalty-free, but earnings have their own rules:
· Earnings require the account to be open for five years and you must be 59½ or older
· The five-year clock starts with your first Roth IRA deposit
06:43 – In-Service Distributions from 401(k) Plans
You can take distributions while still employed, but the rules are plan-specific:
· IRS default age is 59½, but your plan document can set a different age (examples: age 40, age 55)
· Common reason: rolling funds to an IRA for income planning options not available inside the 401(k)
· Building a retirement "income floor"can increase confidence and even lead to more spending in retirement
09:57 – In-Service Strategy: Roth IRA Consolidation
Participants who already have a Roth IRA on the outside can roll Roth 401(k) funds into it via in-service distribution, consolidating accounts and keeping the five-year clock running.
10:20 – Required Minimum Distributions (RMDs)
RMD ages under SECURE 2.0:
· Born before 1960: RMD begins at 73
· Born after 1960: RMD begins at 75
· Still working and contributing? No RMD from your current plan (unless 5%+ owner)
· Old 401(k)s from prior employers still require RMDs
· IRA RMDs can be aggregated—take from one accountto satisfy the total
· 401(k) RMDs must be taken individually from each plan
· The "Andy Bush Hack": roll old accounts into your active plan to defer RMDs
14:07 – Beneficiary /Inherited Account Rules
Non-spousal inherited accounts changed significantly under SECURE 2.0:
· Old rule: stretch over beneficiary's lifetime or take within 5 years
· New rule: all funds must be distributed within 10 years
· If deceased was already taking RMDs, beneficiary must continue annual distributions
· Strategy: increase your own 401(k) contributions and offset with inherited account distributions
16:35 – Early Withdrawal Exceptions
Several exceptions allow penalty-free early access to retirement funds:
· Medical expenses exceeding a threshold
· Disability
· QDROs (Qualified Domestic Relations Orders) for divorce
· Federally declared disaster provisions
· Hardship withdrawals (still subject to 10% penalty if under 59½)
18:15 – Check Your Summary Plan Description (SPD)
Every provision discussed is plan-specific:
· Ask your HR or plan sponsor for the SPD
· Documents are being updated as SECURE 2.0 provisions phase in
· Your SPD is the definitive source for what your plan allows
✅ Key Rules Quick Reference
· Rule of 55 – Penalty-free 401(k) distributions if you leave your employer at 55+;lost if rolled to an IRA
· 72(T) –Substantially equal periodic payments from IRAs/401(k)s starting at 55; must last 5 years or until 59½
· SIMPLE IRA Two-Year Rule – 25% penalty on distributions or rollovers within two years of first contribution
· Roth Five-Year Rule – Contributions out any time; earnings require 5 years + age59½
· In-Service Distributions – Available while still working; age set by plan document (default 59½)
· RMDs –Age 73 (born before 1960) or 75 (born after 1960); still-working exception for current plan only
· 10-Year Inherited Account Rule – Non-spousal beneficiaries must empty inherited accounts within 10 years
· QDROs –Court-ordered retirement account splits in divorce; rollover is tax- and penalty-free
· Disaster Provisions – SECURE Act allows automatic early access in federally declared disaster areas
19:49 – Closing & How to Reach the Brothers
Bill and Andy wrap up with a reminder that every situationis nuanced—reach out with questions.
· Bill Bush: bbush@horizonfg.com
· Andy Bush: abush@horizonfg.com
📌 Closing Disclaimer
The views depicted in this material are for information purposes only and are not necessarily those of Cetera Advisors, LLC. They should not be considered specific advice or recommendations for any individual. Neither Cetera Advisors, LLC nor any of its representatives may give legal or tax advice. Pete Bush, Bill Bush, and Andy Bush are registered representatives offering securities and advisory services offered through Cetera Advisors, LLC.Member FINRA/SIPC, a broker-dealer and registered investment advisor. Cetera is under separate ownership from any other named entity. 15015 Jamestown Boulevard, Suite 100, Baton Rouge, LA 70810.
Retirement Rules You Didn't Know You Needed to Know
Bill and Andy Bush dive into the retirement plan rules that trip up participants most often—from the Rule of 55 and IRS 72(T) distributions to SIMPLE IRA rollover restrictions, in-service distribution provisions, and the nuances of RMDs under SECURE 2.0. The brothers break down each rule withreal-world examples pulled from recent client calls, covering when you can access your 401(k) penalty-free, why rolling into an IRA can cost you flexibility, how beneficiary rules changed under the 10-year distribution window, and what early withdrawal exceptions (including QDROs and disaster provisions) actually look like in practice. Whether you're planning ahead or reacting to a life event, this episode is a practical field guide to the rules that govern your retirement dollars.
⏱ Episode Timeline & Key Topics
00:00 – Welcome & Episode Setup
Bill opens with a Spicoli quote from Fast Times at Ridgemont High and sets up the theme: retirement plan rules you may or may not have known about.
00:53 – The Rule of 55
If you leave your employer at age 55 or older, you can take distributions from that employer's 401(k) without the 10% early withdrawal penalty:
· Must be the plan at the employer you separated from
· Taxable, but no penalty
· Rolling into an IRA eliminates the Rule of 55 protection
02:12 – IRS Rule72(T): Substantially Equal Periodic Payments
Starting at age 55, you can take early distributions from IRAs or 401(k)s using the 72(T) rule:
· Payments must be substantially equal
· Must continue for five years or until age 59½,whichever is longer
· Andy shares a real client example of someone who used 72(T) after early job loss
03:30 – SIMPLE IRA Two-Year Rule
SIMPLE IRAs carry a unique two-year restriction from the date of your first contribution:
· Distributions or rollovers within two years trigger a 25% penalty (not the usual 10%)
· Rolling funds into a SIMPLE IRA from a 401(k) or other source also requires the two-year window to pass
· SECURE Act expanded allowable rollover sources, but the timing restriction remains
05:31 – Roth Five-Year Rules
Roth IRA contributions can be withdrawn at any time tax- and penalty-free, but earnings have their own rules:
· Earnings require the account to be open for five years and you must be 59½ or older
· The five-year clock starts with your first Roth IRA deposit
06:43 – In-Service Distributions from 401(k) Plans
You can take distributions while still employed, but the rules are plan-specific:
· IRS default age is 59½, but your plan document can set a different age (examples: age 40, age 55)
· Common reason: rolling funds to an IRA for income planning options not available inside the 401(k)
· Building a retirement "income floor"can increase confidence and even lead to more spending in retirement
09:57 – In-Service Strategy: Roth IRA Consolidation
Participants who already have a Roth IRA on the outside can roll Roth 401(k) funds into it via in-service distribution, consolidating accounts and keeping the five-year clock running.
10:20 – Required Minimum Distributions (RMDs)
RMD ages under SECURE 2.0:
· Born before 1960: RMD begins at 73
· Born after 1960: RMD begins at 75
· Still working and contributing? No RMD from your current plan (unless 5%+ owner)
· Old 401(k)s from prior employers still require RMDs
· IRA RMDs can be aggregated—take from one accountto satisfy the total
· 401(k) RMDs must be taken individually from each plan
· The "Andy Bush Hack": roll old accounts into your active plan to defer RMDs
14:07 – Beneficiary /Inherited Account Rules
Non-spousal inherited accounts changed significantly under SECURE 2.0:
· Old rule: stretch over beneficiary's lifetime or take within 5 years
· New rule: all funds must be distributed within 10 years
· If deceased was already taking RMDs, beneficiary must continue annual distributions
· Strategy: increase your own 401(k) contributions and offset with inherited account distributions
16:35 – Early Withdrawal Exceptions
Several exceptions allow penalty-free early access to retirement funds:
· Medical expenses exceeding a threshold
· Disability
· QDROs (Qualified Domestic Relations Orders) for divorce
· Federally declared disaster provisions
· Hardship withdrawals (still subject to 10% penalty if under 59½)
18:15 – Check Your Summary Plan Description (SPD)
Every provision discussed is plan-specific:
· Ask your HR or plan sponsor for the SPD
· Documents are being updated as SECURE 2.0 provisions phase in
· Your SPD is the definitive source for what your plan allows
✅ Key Rules Quick Reference
· Rule of 55 – Penalty-free 401(k) distributions if you leave your employer at 55+;lost if rolled to an IRA
· 72(T) –Substantially equal periodic payments from IRAs/401(k)s starting at 55; must last 5 years or until 59½
· SIMPLE IRA Two-Year Rule – 25% penalty on distributions or rollovers within two years of first contribution
· Roth Five-Year Rule – Contributions out any time; earnings require 5 years + age59½
· In-Service Distributions – Available while still working; age set by plan document (default 59½)
· RMDs –Age 73 (born before 1960) or 75 (born after 1960); still-working exception for current plan only
· 10-Year Inherited Account Rule – Non-spousal beneficiaries must empty inherited accounts within 10 years
· QDROs –Court-ordered retirement account splits in divorce; rollover is tax- and penalty-free
· Disaster Provisions – SECURE Act allows automatic early access in federally declared disaster areas
19:49 – Closing & How to Reach the Brothers
Bill and Andy wrap up with a reminder that every situationis nuanced—reach out with questions.
· Bill Bush: bbush@horizonfg.com
· Andy Bush: abush@horizonfg.com
📌 Closing Disclaimer
The views depicted in this material are for information purposes only and are not necessarily those of Cetera Advisors, LLC. They should not be considered specific advice or recommendations for any individual. Neither Cetera Advisors, LLC nor any of its representatives may give legal or tax advice. Pete Bush, Bill Bush, and Andy Bush are registered representatives offering securities and advisory services offered through Cetera Advisors, LLC.Member FINRA/SIPC, a broker-dealer and registered investment advisor. Cetera is under separate ownership from any other named entity. 15015 Jamestown Boulevard, Suite 100, Baton Rouge, LA 70810.