I definitely need to learn more about this idea. I really like the concept that you can withdraw at any time to help pay for health insurance costs.
https://www.investopedia.com/how-roth-conversion-ladder-works-5214808
Over the years, I have been religiously placing the maximum amount of after tax money into Roth IRAs, which I had thought was the smartest thing to do. As long as it sits in an account somewhere for I believe 5 years, you may withdraw the bulk of it to use as you please. In the past I have only ever withdrawn the money once, and that was to pay down on my mortgage. Some would say that was a bad move, but ultimately it set me up a lot closer to my financial goals than you would think. And if you figure out what your future costs of living are going to be, then you can set yourself up to withdraw that amount every year. Or most of the amount.
Recently I learned about the Roth IRA conversion, which is a way to move money out of a 401k (pretax money) and into a Roth IRA (post tax money). Why would you want to do this, as you are going to be taxed on the distribution as if it were income? The truth is that you wouldn't want to do this move if you were working and earning income, as it would raise your taxes. You would want to do this if you are retiring early and have no income, but you want to use your 401k money to live off of. You would withdraw just the money you need to live from for each year, then it must be held in the Roth IRA account for 5 years to avoid penalties. During the first 5 years you would have to live off some of your other invested money before your 401k turned Roth IRA money becomes available. And each year you would rollover another future year of living expenses to be held for 5 years and then used. Doing this conversion does incur income tax burden, meaning, you will have to pay income tax on it as if it is income.
Sometimes it can help to see some numbers associated with something like this. Here is a graphic I found on the web, this assumes your annual expenses are about $50k. I have already worked out my potential future annual expenses assuming I don't move and don't have a car Mr. Moneymoustasche style, is about $10k, with the bulk of that being the cost of health insurance and food.
I find this trick to be ingenious, as you are not normally allowed to take any distributions from your 401k until age 55, as long as that is your current job you are retiring from, or 59 1/2 otherwise.
I tried calling my 401k company and rolling out some of my money into a self directed IRA or conversion, but they wouldn't let me! They said I was too young. But they also said if I was a former employee I could do whatever with the money. Way to go, hospital organization, why don't we just encourage healthcare workers to leave by holding their 401k money hostage and not allowing them diversified investments? Whoops was that out loud?