Join Early Retirement Today
Thread Tools Search this Thread Display Modes
The minimum IRA withdrawal
Old 07-02-2007, 03:10 PM   #21
Recycles dryer sheets
aenlighten's Avatar
Join Date: Apr 2007
Posts: 275
The minimum IRA withdrawal

is so small, I seriously doubt anyone would ever have to divide an IRA to do so.

aenlighten is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-02-2007, 04:47 PM   #22
Recycles dryer sheets
Join Date: Jun 2007
Posts: 377
I am in about the same situation as you Nun.

I just have everything in jumbo CD's at 5.5%, we blow around 25k a year and reinvest the rest, we are still saving a big chunk per year of cash, so we beat inflation. Since I am married too, as long as I keep it under 63,500k and file jointly I only pay 15% tax, which really amounts to about 12%, because of the tax laddering.

Another thing I do sometimes is have my IRA pay out interests, and it is the same as normal income as long as you do not take out the principal, and if I get too close too the 63,500 tax barrier for joint filing, I just have the IRA compound.

I am VERY conservative though, I just always wonder what, and God forbid, a major nuclear attack on a city or something would do to the market, I mean just look what 2 building falling did in 2001.

Now granted someone in 80% stock with the same assets as me, will most likely die with alot more in assets, but for my lifestyle it is great, and I never worry.

Although I do plan on eventually using some of the extra income to do something like a Vanguard index fund or something like that, but I will only use disposable cash on the stock market, so if it does go all to hell...big deal.

Bigritchie is offline   Reply With Quote
Old 07-03-2007, 04:12 PM   #23
Recycles dryer sheets
Join Date: Dec 2006
Location: Florida
Posts: 249
You sound on the right track. Some thoughts: perhaps get a fee-only planner (note the "fee-only" phrase...) to look at your options. If you are smart enough to post here, you probably shouldn't be paying somebody 1% of assets to manage your money. Some choices can't be easily undone, or have good or horrible tax consequences...IRA is a good example of that. You may want to look at the REHP web site for more info.

Personal biases: 80% in stocks is probably better than 80% in long bonds. Where is your inflation hedge? You should include your home in your net worth, but as an investment it may not be so great. Consider a small (5-10% of gross) position in inflation hedge like gold or silver coin/bullion. If you have $1 mill, you should be easily able to live off 35-40K per year, after taxes even. But I'd get a plan blessed by a pro (or even two) before I tinkered too much. Good luck.
I've got nothing against an honest day's work, provided that someone else does it.
pedorrero is offline   Reply With Quote
Old 07-03-2007, 09:59 PM   #24
Thinks s/he gets paid by the post
nun's Avatar
Join Date: Feb 2006
Posts: 4,331
Originally Posted by dgalbraith100 View Post
Rather than do a 72T, just convert the amount you'll need 5 years from now from the IRA to the Roth. Then you can remove it from the Roth if you need it 5 years after the conversion, tax and penalty free.

I think that this is a better plan than 72T's for anybody who has 5 years of expenses covered in their taxable account. For the first 5 years, live of your taxable while you move 1 years expense to your Roth each year. At the 5 year mark, you take your first years conversion and pull it out of the Roth Tax/Penalty free, and convert another year into your Roth:

So if you need 30K to live on for each year you would do:
1 -> take 30K out of taxable, convert 30K from IRA to Roth.
2 -> take 30K out of taxable, convert 30K from IRA to Roth.
5 -> take 30K out of taxable, convert 30K from IRA to Roth.
6 -> take 30K out of Roth, convert 30K from IRA to Roth.

I would bump the conversions of 30K to be the maximum you can convert to trigger the least amount of taxes. (stay in the lowest tax bracket). Using this method gives you all the benefits of a 72T, but then you don't lock yourself into a 72T.

The two downsides I've been able to find over doing this vs. 72T is that some states tax conversions, but not 72T's, and you are paying taxes 5 years before you use the money. But for 30K I doubt either of those will be a problem.

Now if you were doing a 72T vs. Roth conversion for 120K or more, then it might pay to research that issue more.

This sounds like the right plan for me, with dividends and assuming a 5% return I should be able to take enough to live on out of my taxable accounts without reducing my principal too much. My taxable income will be very low and I'll convert the difference between my income and the top of the 15%
tax bracket each year from my IRA to my ROTH. I'll keep using my taxable accounts for as long as I can and only tap the ROTH and IRAs when the taxable accounts are down to my 3 year cash expense buffer.

nun is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Anyone familiar with income tax treatment of net unrealized appreciation (NUA) chinaco FIRE and Money 2 03-10-2007 06:33 PM
At what age will you take Social Security? retire@40 FIRE and Money 39 10-05-2006 12:58 PM
What type of income fund modhatter FIRE and Money 5 08-31-2006 02:34 AM
What is taxable income? mickeyd Other topics 21 01-29-2005 03:02 PM
Multiple Streams of Income hocus Young Dreamers 30 06-08-2004 08:23 PM


All times are GMT -6. The time now is 10:17 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.