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401k to 72T withdraw question
Old 10-24-2007, 12:22 PM   #1
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401k to 72T withdraw question

I am planning for ER next year. DW and I have seperate 401K's. DW is 47, and I am 53. Can I roll both 401k's into one IRA now, 72T withdraw based on the whole IRA amount until I am 59.5, then have unlimited (no penalty or amount restriction) access thereafter?

I will need 4% SWR from this combined (if possible) or seperate 72T's to fund living expenses my non-cola pension does not cover.

Thanks!
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Old 10-24-2007, 12:29 PM   #2
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Sorry, no can do. Since your 401-k account is specific to you (your particular salary deferrals, etc.) you may not combine your 401-k with your wife's 401-k. When you leave your respective employers, both you and your wife will each want to roll your 401-k into a "Rollover" IRA. This is just a regular IRA but the proceeds come from a 401-k plan rather than annual
contributions.
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Old 10-24-2007, 12:31 PM   #3
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Agree.............IRA stands for INDIVIDUAL Retirement Account.
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Old 10-24-2007, 12:52 PM   #4
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Thank you for replys.

May be seperate post, but the 72T is so restrictive with three withdraw options (no 4%), then IRA tied up until age 59.5. Are there new laws/plans in lawmakers hands to make our money more accessable soon?
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Old 10-24-2007, 01:31 PM   #5
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jeeper,

If you roll over each of the 401ks into two IRAs
From what I understand, you could do exactly what you want and get >4% from each of two IRAs if that is what you chose to do. I don't think you need a law change?

Of the three withdrawal options:
1. Required minimun distribution,
2, Amortization Method (single life),
3. Amortization Method (joint life).

Option 2 will give you the highest withdrawal of the three methods plus if your spouse is listed as the benificiary would get the funds if you exit early. Don't know why anyone would use the 3rd choics? Your withdrawal amount is fixed until 59.5 (although you can make one adjustment during the term of the 72t to a lesser amount).

Unless I'm missing something looks like it would not take much to make it happen? If you have not done so - check out one of the 72t calculators Fidelity Investments: Site Search
just be sure to not enter the beneficiary if you want the individual calucation.
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Old 10-24-2007, 07:38 PM   #6
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Quote:
Originally Posted by jeeper View Post
Thank you for replys.

May be seperate post, but the 72T is so restrictive with three withdraw options (no 4%), then IRA tied up until age 59.5. Are there new laws/plans in lawmakers hands to make our money more accessable soon?
I've looked pretty closely at the 72T. Although it seems very restrictive AFTER you set it up, you do have many options on how you set it up, and some of the restrictions have been relaxed even after setup. There is a very good website you should look at:Welcome to 72t on the Net. At the end of the day, it is a fairly convoluted procedure in my opinion, but as suggested ealier, the large MF companies can help.
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Old 10-24-2007, 08:24 PM   #7
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Quote:
Originally Posted by jeeper View Post
May be seperate post, but the 72T is so restrictive with three withdraw options (no 4%), then IRA tied up until age 59.5. Are there new laws/plans in lawmakers hands to make our money more accessable soon?
As mentioned above, you have some flexibility in how you setup your accounts before you start the 72T. You can rollover one or both of your 401k's into multiple IRAs so that some combination of IRA totals allows you to get near the 4% SEPP you are looking for. (i.e. Take 72T from some IRAs and not from others.)

Alternatively, just take a SEPP option that is higher than 4%. Nobody says you have to spend it all. You can put the excess each year into a taxable account to be used when needed. This is my tentative plan anyway.
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Old 10-24-2007, 09:15 PM   #8
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Jeeper, if you're 53 now then you'll turn 55 in 2009. If you wait until January of 2009 to retire, then you will be to withdraw from your own 401k without needing to go through the 72t hassle to avoid penalty. This may or may not be true depending on the plan rules of your 401k plan -- get the Summary Plan Description and read it. I'm also assuming that your 401k is sponsored by your current employer and retirement in Jan 2009 means that you remain in an employment status with your current employer for at least one day in 2009.
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Old 10-25-2007, 11:51 AM   #9
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Thanks for responses/ideas. I had not considered building/seperating IRA's initially to get me to 4% + (will have to figure in something for inflation for 6 and 12 years each).
Since DW and I have both seperated from the 401k company, we will not qualify for the "55 and still working there" clause. Guess that is one thing that will not hold me back! We are both currently working for another company. Thanks again!
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