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Old 12-31-2012, 06:31 PM   #1
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Question. I am just about to turn 55 and thinking about a 72t. My wife and I have just over 600k and i will get a monthly pension of $1400. I should pull about 40k a year with the 25k I can pull from my 401k and the pension. My house payment is 1000 pr month. Health ins worries me. Go high deductible what kind of rates could I get? Thanks will listen to anyone. Appreciated. Hey I am from MN nice to meet you all!
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Old 12-31-2012, 07:03 PM   #2
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Same age here - is this a 401K or IRA?
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Old 12-31-2012, 07:08 PM   #3
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Its a 401k that I must rollover if I break ties with my company
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hi westlake
Old 12-31-2012, 07:09 PM   #4
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hi westlake

Will take any advice
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Old 12-31-2012, 07:19 PM   #5
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snap,
Check out eHealthInsurance.com for some quotes on health insurance. Here's a tip, when they ask for "start coverage on" date, just put in the 1st of next month. If you go more than that some company's plans won't show up: they don't want to quote too far out.
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Old 12-31-2012, 08:16 PM   #6
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Its a 401k that I must rollover if I break ties with my company
Welcome to the board, Snapdog.

A 401(k) expert will be along shortly, but if I understand the rules correctly then you can start taking penalty-free withdrawals from a 401(k) if you retire from that employer during the year you turn age 55.

I'm weak on 401(k) rules, though, so somebody else needs to chip in here.
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Old 12-31-2012, 09:57 PM   #7
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You need to check your company's Summary Plan Description to see if includes a systematic withdrawal from the 401k. Mine did. The way I understand it, the law allows systematic withdrawals without 10% tax penalty from your 401k if you retire from the company that sponsors the 401k in the year you turn 55 or later BUT the law does not require the company to offer that ability.
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Old 12-31-2012, 11:29 PM   #8
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You need to check your company's Summary Plan Description to see if includes a systematic withdrawal from the 401k. Mine did. The way I understand it, the law allows systematic withdrawals without 10% tax penalty from your 401k if you retire from the company that sponsors the 401k in the year you turn 55 or later BUT the law does not require the company to offer that ability.
I don't think this is correct. I am pretty sure that if he has separated from the company after age 55 then he has the right to take distributions without penalty and the plan cannot restrict him from doing so. OF course, he would lose that ability if he were to transfer the 401k assets to an IRA, since IRAs do not have that feature.

You may be thinking of the option of an in-service distribution by which a 401k plan participant can take distributions from his 401k while remaining employed by that company provided that he is over 59.5 years and the plan permits it. Plans are not required to permit in-service distributions and not all do.

For the OP, keeping the funds in the 401k and taking distributions would have the advantage over 72t withdrawals of not committing you to a fixed distribution schedule. In other ways, such as investment options and costs, the 401k might be inferior to an IRA, however.
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Old 12-31-2012, 11:33 PM   #9
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Its a 401k that I must rollover if I break ties with my company
Why do you think this is the case? Unless your 401k assets are under $5000, I believe you have the right to keep them in the 401k and doing so would enable you to take penalty-free distributions at your current age of 55.
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Thanks
Old 01-01-2013, 02:14 AM   #10
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Thanks

I am going to look further into this thanks to you guys. You are great! I know one guy just left at 55 and he had to do a 72t SEPP. But maybe he did not look in far enough. Glad I joined this board.
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Old 01-01-2013, 03:22 AM   #11
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OF course, he would lose that ability if he were to transfer the 401k assets to an IRA, since IRAs do not have that feature.


Snap - the above is CRITICAL.... if you move it from 401 to a roll over IRA it is NO LONGER AN EMPLOYER PLAN for 72T Purposes.

I believe you can STILL avoid the 10% penalty if you essentially annuitize it over your life expectency. WAY less flexible.

Then I ER'ed I had funds in BOTH a 457 AND a 401K. 457 NEVER has 10% penalties... THAT has been my source of fun money for 3+ years.

Since my draw down plan did NOT involve the 401k until WELL after 59 1/2 (which will be in October 2013) I went ahead and rolled THAT asset to an IRA = better investment choices.
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Old 01-01-2013, 10:08 AM   #12
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I don't think this is correct. I am pretty sure that if he has separated from the company after age 55 then he has the right to take distributions without penalty and the plan cannot restrict him from doing so.
I don't think the issue is the 10% tax penalty, but, rather, whether you can take periodic withdrawals or must take a lump sum. The plan cannot affect the tax code, but it can require that you take a lump sum instead of regular withdrawals. You can imagine that some plans don't want the expense associated with maintaining your account and allowing periodic withdrawals. You may not want to take a lump sum and so might choose to rollover to an IRA.

At least, that is my understanding of the matter. I welcome correction.

Edit: This IRS page suggests that an employer can, but is not required to, offer periodic withdrawals to employees who retire at 55. http://www.irs.gov/Retirement-Plans/...ribution-Rules
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Old 01-01-2013, 10:26 AM   #13
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Originally Posted by gsparks2 View Post
You need to check your company's Summary Plan Description to see if includes a systematic withdrawal from the 401k. Mine did. The way I understand it, the law allows systematic withdrawals without 10% tax penalty from your 401k if you retire from the company that sponsors the 401k in the year you turn 55 or later BUT the law does not require the company to offer that ability.
Quote:
Originally Posted by Khufu View Post
I don't think this is correct. I am pretty sure that if he has separated from the company after age 55 then he has the right to take distributions without penalty and the plan cannot restrict him from doing so. OF course, he would lose that ability if he were to transfer the 401k assets to an IRA, since IRAs do not have that feature.

You may be thinking of the option of an in-service distribution by which a 401k plan participant can take distributions from his 401k while remaining employed by that company provided that he is over 59.5 years and the plan permits it. Plans are not required to permit in-service distributions and not all do.

For the OP, keeping the funds in the 401k and taking distributions would have the advantage over 72t withdrawals of not committing you to a fixed distribution schedule. In other ways, such as investment options and costs, the 401k might be inferior to an IRA, however.
My understanding is that the ability to take penalty free withdrawals from a 401k if you sever service after attaining age 55 is not universal but varies from plan to plan. Like gsparks2 posted, mind did, but I've heard of others that do not.

So OP, check with your employer to see if your plan allows penalty free withdrawals if you quit after attaining age 55. If so, that is the way to go.
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Old 01-01-2013, 11:12 AM   #14
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Welcome to the board, Snapdog.

A 401(k) expert will be along shortly, but if I understand the rules correctly then you can start taking penalty-free withdrawals from a 401(k) if you retire from that employer during the year you turn age 55.

I'm weak on 401(k) rules, though, so somebody else needs to chip in here.
When I bailed at 54, this was the case. I left at that age due to a buyout offer that was too good to refuse, otherwise would have waited till after turning 55.
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Old 01-08-2013, 06:27 AM   #15
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In my case, I'm not sure I want them to know that I am considering retiring at 55 (which I reach in March). So just ask for a "Summary Plan Description"? Our 401K is with Vanguard, would the particulars be on their site under our plan, rather than having to ask HR?
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Old 01-08-2013, 07:20 AM   #16
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I would think so. Mine was with Trowe and plan description was downloadable, also it was on company HR department internal website. Certainly no reason to tell them anything, HR is there to protect the company from you, helping you is secondary.
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