Don’t kill the golden goose of your golden years

Many of you have an Individual Retirement Account. Maybe you started a 401(k) retirement plan while you were a company driver, then rolled it into an IRA when you became an owner-operator. Or you’ve had the steel-belted discipline to tuck away some money each year in an IRA.

During these difficult times, those dormant funds can begin to look more attractive than a sizzling steak after a hard day’s drive. Rather than digging in when the urge hits, treat that retirement account more like a maturing fine wine – not to be disturbed until it’s time.

Trucking accountant Nick Kmezich recalls a client who started the year with $17,000 in an IRA. By summer it was gone. “The driver took it as a premature distribution,” he says. Not a good idea.

The problem is bigger than draining retirement funds that will be hard to replace: There’s a 10 percent penalty for early withdrawal, plus you have to pay income tax on the withdrawal because you dodged tax the year you earned it. Assuming you’re in the 15 percent federal tax bracket, add another 5 percent for state income tax.

That means you forfeit at least 30 percent of your withdrawal to Uncle Sam. He doesn’t deserve that much of your hard-earned money. Instead, Kmezich advises, plan.

“Whatever your cost to run that rig, part of that cost needs to be your retirement funding,” he says. “You have to budget yourself through the month to get your bills paid.” If your cash flow has taken a nose-dive to the crisis point, reduce or suspend your monthly savings. As soon as your operation levels out, resume saving.

Many people find it easiest to arrange for a bank draft to automatically shift some dollars into an IRA every month. It’s OK to start out small, and it’s much better than ending with nothing.

Tapping your IRA
for emergency money
not only wipes out
years of hard-earned
retirement funds,
but it also yields
only $7 for every
$10 you pull out.

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