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Old 04-12-2010, 05:52 PM   #1
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Need to know how to use my own money without the goverment getting most of it.
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Old 04-12-2010, 05:54 PM   #2
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Old 04-12-2010, 05:58 PM   #3
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Need to know how to use my own money without the goverment getting most of it.
It depends... really it does.

You might want to introduce yourself and your situation a little better if you think we can provide any help. With the above statement, well, all I can say is "It depends".

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Old 04-12-2010, 06:09 PM   #4
Confused about dryer sheets
 
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I retired at age 54 and now I'm trying to find out the best way to get some of my 401k out on a monthly bases without having to pay so many taxes. Should I roll over into an IRA account and then have a distribution set up through my bank or leave it in the 401K? According some people I'v spoken with I can gain more on and IRA than I'm gaining on my 401K. I'm 56 now.
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Old 04-12-2010, 06:11 PM   #5
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Need to know how to use my own money without the goverment getting most of it.
Either have a low income or utilize available deductions. It works for many.

Nearly half of US households escape fed income tax - Yahoo! Finance
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Old 04-12-2010, 08:32 PM   #6
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An IRA could have lower fees than a 401-K. It will also have more options to invest in.

AFAIK, the only way to avoid the 10% penalty on early withdrawals from a 401K or IRA is to use a 72T.

Withdraw just enough to stay below the federal tax level . Buy a tax software package and figure out how much you can take out of your IRA and still stay below the federal tax threshold.
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Old 04-13-2010, 06:59 AM   #7
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I would leave the money at your 401k for now for the simple reason that you can withdraw without the 10% penalty from a 401k at age 55 but must wait until you are 59 1/2 to avoid the penalty when pulling from an IRA. After you turn 60 you can roll to an IRA.

As for the rest, details would be helpful. However, you got the deduction when you contributed to the account, so don't squeal too loudly about the back end taxation. In any event, you will likely be surprised how much you can draw and pay a trivial amount of taxes.
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Old 04-13-2010, 08:14 AM   #8
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According some people I'v spoken with I can gain more on and IRA than I'm gaining on my 401K. I'm 56 now.
Hopefully, those "people" are not financial advisors with a list of load funds for you to invest in

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I would leave the money at your 401k for now for the simple reason that you can withdraw without the 10% penalty from a 401k at age 55 but must wait until you are 59 1/2 to avoid the penalty when pulling from an IRA. After you turn 60 you can roll to an IRA.
Brewer: couldn't he roll to an IRA and then 72T out of that at the same rate he planned to pull from the 401K?
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Old 04-13-2010, 09:18 AM   #9
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Brewer: couldn't he roll to an IRA and then 72T out of that at the same rate he planned to pull from the 401K?
Sure, but a 72t is inflexible and if you color outside the lines the IRS will skewer you.
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Old 04-13-2010, 03:27 PM   #10
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In addition to what has already been said, depending on your tax bracket now and what it will look like after things like SS and RMDs may enter the picture, a Roth conversion might make some sense as long as you can use up lower tax brackets in 2011 and 2012 to do it. (You make no mention of income or tax bracket so I can't say whether that would make sense in your situation.)

Other than that, I'd tend to agree with Brewer about keeping it in the 401K at least until age 59 1/2 because of the flexible penalty-free withdrawals starting at age 55. If you have room in lower tax brackets you may want to "use" as much of those lower brackets as you can with withdrawals from the 401K -- especially if, again, future SS, RMD or pensions may increase your taxable income down the road. For example, if it's December of some given year and it looks like you'll have another $10,000 "unused" in the 15% bracket, you may want to consider taking out $10,000 and locking in taxes at a low 15% rate on that portion unless you expect to have lower income in the future.
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