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View Poll Results: Did you, or do you plan to, 72t to ER
Yes 30 29.13%
No 73 70.87%
Voters: 103. You may not vote on this poll

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Old 02-15-2011, 06:01 PM   #21
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Originally Posted by nun View Post
This will be an interesting survey. We are always being encouraged to save in tax deferred accounts and as I have access to a state pension plan a 457 and a 403b I could tax defer an awful lot. However, I don't max out my tax deferral possibilities as I like after tax saving for the flexibility it gives and I'd hate to go into ER without a good after tax balance for unforeseen issues.
Yeah, I agree it is overrated maxing out your tax deferred accounts. If you plan on leaving early it pays to have after tax accounts. Especially if you manage them tax efficiently.
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Old 02-15-2011, 08:19 PM   #22
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I voted no.

Our plan is to tap my 457(b) accounts when we ER. I will have a pension that kicks in at 55.5 years old. We will leave the IRAs and DW's 401k accounts untouched until later.
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Old 02-15-2011, 08:56 PM   #23
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I plan on using Roth rollovers + 5 years to pull the $ from my IRA(s). I think that provides alot more freedom than doing 72t. The downside is you need to have enough to live 5 years in taxable, and you need to be able to project out 5 years on expenses.

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Old 02-15-2011, 10:32 PM   #24
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Yes, yes and yes. My husband is planning to retire in January at 51 and I'll be 53 in Oct, so the plan now is to tap my IRAs starting next year for about 5 1/2 years. Would rather spread out some of the taxes over the next several years as our IRAs have grown to a sizable amount over time. And once he's not working we will be in a very low tax bracket. Wish we had more now in taxable but we have more in IRAs - we could still use the taxable money primarily but think that for us, the 72t is the better option. Did the Roth conversion calculators but came out better not converting each time.
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Old 02-15-2011, 11:28 PM   #25
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Yes - since I retired at 48 with 90+% assets in my IRAs, 72t withdrawals provide most of my 'income'. I use the annual recalc method, which means I will withdraw just over 3% of my Dec31,2010 balance this year. The withdrawals are almost exactly covered by the dividends from the stocks in my IRA.
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Old 02-16-2011, 05:30 AM   #26
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No - I've always been a big fan of Roth IRAs, and now I'm an even bigger fan in regards to this issue. I'm planning to have 13-14 years to cover before I turn 60. I've made max contributions for most years since the Roth IRA was available and I've rolled prior employer savings plans into it (and amounts from current employer that were allowed). Because of this, I have over twice as much in Roth accounts than I have in tax deferred accounts.

I also plan to convert the tax deferred funds to Roth during low income years to max out the 15% bracket.

I figure we can make it at least 5 years using our taxable accounts (more if we bring in some money from our self-employed ventures).

When we need money from the sheltered accounts, I'll just take contributions and conversions that have aged at least 5 years out of the Roth.

This way, I'm not locked into taking a fixed amount out of the tax sheltered accounts each year.
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Old 02-16-2011, 06:56 AM   #27
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A month ago the answer would have been yes, at least to supplement our after tax accounts. However, my DW just found a job she loves and has decided to work for another 5 or more years. Her job will cover health care and 90% of our living expenses. Now we'll use the income from the after tax accounts to cover the taxes on some small Roth conversions, keeping our AGI within the 15% tax bracket.
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Old 02-16-2011, 10:55 AM   #28
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This poll is missing the lesser known cousin IRS Rule 72Q, same rules as 72T but applies to Annuities; Certain Proceeds of Endowment and Life Insurance Contracts.

I didn't answer, I'm in the Maybe/Not Sure boat.
Do you have a link to info on rule 72Q? I am thinking of taking part of my pension as a lump sum which I would buy an SPIA with. I plan to retire younger than 59-1/2 and don't know whether payments from an annuity inside an IRA would be subject to the 10% penalty for premature distributions.
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Old 02-16-2011, 12:28 PM   #29
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My plan is to hang in at w*rk until I turn 55, not only for retiree health insurance, but I plan to leave enough money in my w*rk 401K to live off of until I turn 59 1/2, since you are not penalized if you retire or leave the company in your 55th year.
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Old 02-16-2011, 12:54 PM   #30
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We plan to use taxable until 59 1/2
Same here. I consider my IRA to be one of my "reinforcements" I can tap into when I turn 59.5 in 12 years. Until then, my taxable accounts will provide me with dividend income, and, if needed I can tap into the taxable principal.
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Old 02-16-2011, 01:08 PM   #31
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My plan is to hang in at w*rk until I turn 55, not only for retiree health insurance, but I plan to leave enough money in my w*rk 401K to live off of until I turn 59 1/2, since you are not penalized if you retire or leave the company in your 55th year.
You may want to make sure your plan allows distributions before normal retirement age. That is one of the drawbacks to relying on 401(k)'s for early retirement. You may not have access to your money until 65. Even if your plan allows distributions before age 65 it could be amended to allow no distributions before 65 at any time. The likelihood is not too great, but it is worth considering. It would be a shame to see well laid plans go up in smoke because you can't get the money out.
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Old 02-16-2011, 01:12 PM   #32
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My plan is to use 72t withdrawals, but I may not retire early enough to need them if my after-tax savings continues to grow.
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Old 02-16-2011, 01:13 PM   #33
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You may want to make sure your plan allows distributions before normal retirement age. That is one of the drawbacks to relying on 401(k)'s for early retirement. You may not have access to your money until 65. Even if your plan allows distributions before age 65 it could be amended to allow no distributions before 65 at any time. The likelihood is not too great, but it is worth considering. It would be a shame to see well laid plans go up in smoke because you can't get the money out.
Thanks for posting, in my case I have already checked and our plan does allow for distributions, but good advice for all.
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Old 02-16-2011, 01:36 PM   #34
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Yes - since I retired at 48 with 90+% assets in my IRAs, 72t withdrawals provide most of my 'income'. I use the annual recalc method, which means I will withdraw just over 3% of my Dec31,2010 balance this year. The withdrawals are almost exactly covered by the dividends from the stocks in my IRA.
This will likely be my plan. Only 43 now, want to retire at 50. Currently 80% of assets are in 401k or IRA so 72t will be the only way I will be able to FIRE at 50.
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Old 02-16-2011, 01:39 PM   #35
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Yes - since I retired at 48 with 90+% assets in my IRAs, 72t withdrawals provide most of my 'income'. I use the annual recalc method, which means I will withdraw just over 3% of my Dec31,2010 balance this year. The withdrawals are almost exactly covered by the dividends from the stocks in my IRA.
3% of your balance, gross (before taxes)?
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Old 02-16-2011, 02:14 PM   #36
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3% of your balance, gross (before taxes)?
Yes. My divisor this year (since I will turn 53) is 31.4, so 3.18%.
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Old 02-16-2011, 02:57 PM   #37
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I answered No. We have enough after tax funds to not need to. However we are making Roth conversions to lower the eventual RMD's

One of the Roth's is also dedicated to our LTC fund and is not part of retirement funds for SWR calculations.
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Old 02-16-2011, 03:37 PM   #38
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The number of people who can live off after tax only is a surprise to me. I think this point out just how strange/bizzare/exceptional/special etc are the people on this forum
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Old 02-16-2011, 03:42 PM   #39
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The number of people who can live off after tax only is a surprise to me. I think this point out just how strange/bizzare/exceptional/special etc are the people on this forum
I've crossed out the words that don't apply to me
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Old 02-16-2011, 04:57 PM   #40
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The number of people who can live off after tax only is a surprise to me. I think this point out just how strange/bizzare/exceptional/special etc are the people on this forum
Well in my case I currently think retiring at 55 (in 15 years) is a bit optimistic. Hopefully I'm proven wrong. But if so, I'd have at most 4.5 years to live off after-tax money before I could use the IRAs without 72t.
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