Did you, or will you, 72t to ER?

[nun]

Here's a poll to find out what percentage of us have, or plan to, 72t to finance our ER.

 

[East Texas]

Here's a poll to find out what percentage of us have, or plan to, 72t to finance our ER.

"72t" means... what?

 

[rescueme]

Didn't have to. Savings used for retirment till 59.5; started drawing from TIRA/SPIA after that age...

 

[rescueme]

"72t" means... what?

Definition: Substantially Equal Periodic Payment (SEPP) / 72(t) Payments | 72t Advisors

It's how you get to withdraw from a TIRA before age 59.5 and avoid the 10% extra tax on withdrawls...

 

[nun]

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.

 

[HFWR]

Don't plan to, won't need to. 401k is accessible at 55 if you "retire". I was "retired" at 53, but bridged to 55. As it is, probably won't try to voluntarily retire until 59.5 or later anyway...

 

[Dimsumkid]

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.

 

[growing_older]

Am not at that point yet, but I am hoping to NOT 72t, so I can use those years to Roth convert.

 

[FIREd]

When DW retires we plan on keeping our IRAs untouched until at least 59.5. It shouldn't be too hard, only 15-20% of our investments are in tax-deferred accounts.

 

[W2R]

Since I couldn't retire until age 61.5, it wasn't an issue.

 

[Lisa99]

We plan to use taxable until 59 1/2

 

[ziggy29]

Probably. I'm at least planning for the likelihood that I'll do it, though if I can pull the plug without getting to my IRAs and 401K before age 59.5, I'll certainly hold off.

 

[Nova]

ER'd at 49 in '96 and have not needed tax deferred funds.

 

[easysurfer]

Yes, 72t's a portion of my traditional IRA. Still have several years to go before tapping into IRA before penalties without 72t'ing it.

 

[Major Tom]

Currently about 50% of my funds are in taxable accounts. I'll be receiving an inheritance in a few months which will push that figure to 60%. When I do ER or ESR, the taxable accounts will take me to age 60 (and hopefully beyond).

The good part of this is that I don't have to fiddle around with a 72(t). The bad part is that I have to figure out how to invest the money in the taxable accounts while remaining tax-efficient.

 

[nun]

Wow only 18% using 72t to ER. I'm slightly surprised, although I bet if you ER at 40 or 50 you're far more likely to 72t than if you retire at 55.

 

[Arnie]

No, since I turn 55 this year and the bulk of my retirement savings are in a 401(k) with my current company.

 

[Dog]

I prefer not to utilize 72T, but still unsure for now.

 

[Lisa99]

I voted No, but after answering I got curious and went back to ESPlanner to see what it recommended.

For tax minimization it recommended taking income starting in the first year of retirement from both tax deferred and taxable sources: 1/3rd from my 401k, 1/3 from DH's 401k and 1/3 from taxable.

I assume the recommendation is to reduce RMD at 70 1/2 since we will have both a pension and the highest bracket SS payments (assuming SS is still around in 2027).

 

[JmfromTx]

My plan is to spend savings until I'm 62 (5 1/2 yrs) and then tap the 401K, IRA. I'll also take my wife's social security at 60 which will help ease me along until I decide to take mine. If something bad happens I'll have to regroup. I don't want my personal savings to fall below one years worth of normal spending.

 

[bcinvest]

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.

 

[Uncle Drew]

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.

 

[dgalbraith100]

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.

Laters,
-d.

 

[WineLover01]

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.

 

[CyclingInvestor]

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.