401(k)s and IRAs: Grow your money, shrink your taxes

After you've dipped into your taxable assets, move onto your tax-deferred accounts like your 401(k) or a traditional IRA and that can be done in a number of ways - by taking a lump-sum distribution or by buying an annuity.

But let's say you decide to retire young and really need to tap your IRA. In that case, you can sidestep the 10 percent early-withdrawal penalty by taking advantage of what's known as the 72(t) annuity exemption.

Basically, you must draw the money from your IRA in "substantially equal periodic payments." You have leeway in how you calculate those payments, so you can make them larger or smaller, depending on which of three IRS-approved methods you choose. But after you begin, you can't change the amounts and you must continue taking out money for five years or until you reach age 59-1/2, whichever takes longer. After that you can stop the payments and go back to drawing as much or as little from your IRA as you like until, if it's a traditional IRA, you turn 70-1/2.

But years of careful planning may have left you with more in your IRA than you could ever need. Luckily, Congress has made it easier to be generous. For 2007 only (unless lawmakers extend this 2006 law), you may donate up to $100,000 a year to a charity directly from your IRA.

To qualify, you must be 70-1/2 or older. You won't pay any taxes on the withdrawal (and you can't deduct your gift), but the donation counts toward your required minimum distribution, making it an especially good strategy if you have a sizable traditional IRA.