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If you are looking to to pull cash from your 401(k) plan or traditional IRA without getting hit with a penalty, the IRS will allow you to do it. Generally, taking an early withdrawal from a qualified retirement account — that is, cashing out either of those accounts before age 59½ — results in a 10 percent penalty. In addition, you'll also need to pay income taxes on the distribution itself. However, not all cash-outs are the same. The IRS has defined a narrow set of circumstances in which it will waive the 10 percent penalty and permit you to take the early withdrawal. One of the lesser-known circumstances includes receiving a series of equal payments from your individual retirement account or your 401(k), which is known in tax circles as a "72(t) distribution." Beware: Just because the IRS will allow this penalty-free cash out, doesn't mean you should take it. "The first overriding factor is 'Never do it,'" said Ed Slott, CPA and founder of Ed Slott & Co. "You will have less money for retirement. It's the last resort unless you need it." Here's what you need to know about pulling a series of payments from your retirement account.

It's complicated

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Generally, if you're drawing down money from your IRA, you need to figure out the amount of payments you'll receive, based on your age and life expectancy. Once you start receiving the payments, you need to commit to taking at least one payment a year for five years, or until you reach 59½, whichever is longer. After the longer period of time is over, you can change your payment amount or stop the withdrawals. The rules are slightly different for drawing down from a 401(k). In this case, you have to separate from service during or after the year you turn 55 in order to start taking payments.

Once you start, you must keep going. You are stuck for at least five years. Lisa Featherngill CPA

Here's where things can get messy: If you make changes to your payments or if you go into the account to take an additional withdrawal while receiving the distributions, you'll face the 10 percent penalty retroactively for payments received, plus interest. Even rolling a 401(k) into the IRA from which you're taking these payments can "break" your schedule and subject you to penalties and interest, Slott said. "Once you start, you must keep going," said Lisa Featherngill, a CPA and member of the American Institute of CPAs personal financial planning executive committee. "You are stuck for at least five years."

No room for error

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It's this lack of flexibility, along with the fact that you're using retirement dollars, that makes CPAs reluctant to recommend the 72(t) distribution. "What if one day your roof needs to be replaced or you have an emergency medical expense?" asked Jeffrey Levine, CPA and director of financial planning at BluePrint Wealth Alliance.

"You'd have no choice but to break your payment schedule, go into the account and have a 10 percent penalty on everything you received prior to 59½," he said. In a cash crunch, an emergency fund would be the best source of money, Levine said. A home equity line of credit or even a 401(k) loan — provided you can pay it back — are preferable to taking equal payments from your retirement account, he said.

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