fee-only planner or bunch of eccentrics?

[Gazingus]

I want to retire on my 50th birthday in June 2011 using a 72t. Should I talk to a fee-only advisor or just trust all the retired people on this forum to be my guide?

[FinanceDude]

Quote:

Originally Posted by Gazingus I want to retire on my 50th birthday in June 2011 using a 72t. Should I talk to a fee-only advisor or just trust all the retired people on this forum to be my guide?

Neither, you should read books and take control of your own destiny.......

[REWahoo]

I agree with FinanceDude.

Maybe the world really is coming to an end in May.

[youbet]

Gosh, did you try to pick two bad alternatives out of many and propose them as the only two choices or did it just work out that way?

You should educate yourself. Nothing will replace that. In addition, if you are not retiring on a shoe string and can easily afford it, some help from a well qualified, fee-only advisor wouldn't hurt. Especially if you personally are already well read on the subject and can ask good questions and give specific instructions on what you want. Maybe a CPA would be better since you'll want to follow the IRS rules carefully. And listening in on discussions here on this board, or similar discussion areas, given that you are reasonably well informed and well read, can be enlightening too.

[FinanceDude]

Quote:

Originally Posted by REWahoo I agree with FinanceDude. Maybe the world really is coming to an end in May.

I heard through the grapevine that you made a New Year's Resolution to agree with me ONCE, but ONLY ONCE, so now you are free to go back to your "normal life"..........

[Westernskies]

Quote:

Originally Posted by Gazingus I want to retire on my 50th birthday in June 2011 using a 72t. Should I talk to a fee-only advisor or just trust all the retired people on this forum to be my guide?

We'd be happy to charge you a fee if you think it will level the playing field.

[haha]

Quote:

Originally Posted by Gazingus I want to retire on my 50th birthday in June 2011 using a 72t. Should I talk to a fee-only advisor or just trust all the retired people on this forum to be my guide?

I would contact someone from Ameriprise. If you don't met his minimum and he won't help you , call Edw D. Jones. For a do-it-yourself option, contact Mr. *****, or John Galt 1.

Under no circumstances trust the eccentrics and malcontents on this board- least of all me.

Ha

[NW-Bound]

Which eccentrics? Can you get two of them here to agree?

[Westernskies]

Quote:

Originally Posted by NW-Bound Which eccentrics? Can you get two of them here to agree?

...let alone us the malcontents.

[NW-Bound]

Eh! Speak for yourself there... I am just an eccentric and everybody here knows it.

[Martha]

Goodness, what a bunch of smart aleck responses.

Gazingus, here is a FAQ with an extensive reading list: http://www.early-retirement.org/foru...ist-46732.html

As far as 72t's, I suggest reading Intercst's very good article on the subject, available here: Retire Early: Can I withdraw money from my IRA before age 59½ ?

I am not quite sure what you are referring to when you say "busting" your SEPP, a link would help.

[Martha]

This site is excellent on 72t issues: 72t.Net | SEPP Plans | IRC Section 72(t) | 72t Distribution | IRC Section 72(q) | yyyZ.Com

[Gazingus]

Thanks, Martha. I got the term "bust" from 72t.Net. It may mean any action that causes you to owe penalties on your SEPP to the IRS. I'll read more before I start pestering.

[NW-Bound]

Quote:

Originally Posted by Martha Goodness, what a bunch of smart aleck responses.

Hey, do not blame us. We were distracted by what the OP called us in his thread title, which of course is not inaccurate. Personally, the term turns me on. In my work, we talk of orbital eccentricity, or the earth eccentricity which is a measure of its oblateness. Eccentricity is what makes things interesting.

[DeborahB]

Hey, I met with a planner who wanted to charge me a fee (% of my money) per year, move me totally into mutual funds, and suggested I'd net much less than I do now investing on my own.

For some reason I declined.

I'm in a demographic where we get invited to free dinners at nice restaurants if we sit through their educational seminar... heh heh... I only met with this one for the free information they provided on my asset allocation. I didn't agree with him.

Seriously, meeting with a CPA and/or with a fee-only financial planner isn't a bad idea. However, you'll get incredible information here on this board. You may find you don't need it. The CPA for info on the 72t is a good idea.

I'm in do-it-myself mode.

[DeborahB]

Quote:

Originally Posted by NW-Bound Hey, do not blame us. We were distracted by what the OP called us in his thread title, which of course is not inaccurate. Personally, the term turns me on. In my work, we talk of orbital eccentricity, or the earth eccentricity which is a measure of its oblateness. Eccentricity is what makes things interesting.

Eccentricity is my favorite thing! I must be in the right place...

[Walt34]

The advice given here is worth exactly what you paid for it.

Seriously, chart your own course. Everyone's priorities are different, and the decisions - and their consequences - are yours alone.

[brewer12345]

Quote:

Originally Posted by Gazingus Thanks, Martha. I got the term "bust" from 72t.Net. It may mean any action that causes you to owe penalties on your SEPP to the IRS. I'll read more before I start pestering.

I will not claim to be an expert or even particularly knowledgable about 72t withdrawals, but my recollection is that the main risk of busting your 72t setup is having your IRA investments fail to produce enough cash on a regular basis to satisfy the required withdrawals that you are locked into. So I think the biggest challenge is making sure your portfolio does not fail to allow the required withdrawals for the necessary length of time. This isn't all that different from traditional SWR worries.

[Martha]

Quote:

Originally Posted by brewer12345 I will not claim to be an expert or even particularly knowledgable about 72t withdrawals, but my recollection is that the main risk of busting your 72t setup is having your IRA investments fail to produce enough cash on a regular basis to satisfy the required withdrawals that you are locked into. So I think the biggest challenge is making sure your portfolio does not fail to allow the required withdrawals for the necessary length of time. This isn't all that different from traditional SWR worries.

From Interct's article I linked to above:

What if my IRA runs out of money while taking SEPP distributions.

If you have been following an approved SEPP program and losing investments deplete your IRA before age 59-1/2, the IRS will not assess the 10% penalty and retroactive interest changes that usually result upon a modification to the annual distribution. (See Rev. Ruling 2002-62.)

Additionally, if you have been using the amortization or annuity method, you may make a one time change to the Minimum Distribution method. For a given IRA balance, this will reduce the annual distribution and allow the remaining portfolio to last longer. (See Rev. Ruling 2002-62.)

This is good news for those who attempted to take a SEPP using the annuity method with a high interest rate or from a concentrated portfolio and have suffered severe losses. If you invested primarily in something like Enron or WorldCom, your portfolio could be close to zero by now. The opportunity to make a penalty-free change to the minimum distribution method will offer some belated relief -- at least from the IRS penalties.

On the other hand, if you invested in Dell or Microsoft ten years ago and your portfolio has grown appreciably, you could also benefit from a change to the minimum distribution method. For example, let's say a 40-year-old started a SEPP eight years ago in November 1994 when 120% of the Long-Term Federal applicable rate was 9.61%. Using the UP-1984 Mortality Table and the annuity method, the fixed annual withdrawal in 1994 would be $9,456 from a $100,000 IRA. If the portfolio had grown to $1 million today, our now 48-year old retiree could switch to the minimum distribution method and take $27,780 from a $1 million IRA in 2002. That's almost a three-fold increase in the annual IRA distribution without incurring a penalty.

The option to switch to the minimum method may also appeal to those that decide to return to work or receive another source of taxable income that makes it unnecessary to continue their IRA withdrawals. Completely stopping the SEPP withdrawals would result is the application of the 10% penalty to all distributions to date, plus interest. Switching to the minimum method would at least reduce the distribution without triggering the penalty. However, the disadvantage is that you won't be able to change back to the amortization or annuity method at a later date without triggering the 10% penalty.

Here is the revenue ruling Intercst is talking about: http://www.brentmark.com/rr200262.htm

[Jay_Gatsby]

Learn what you can about personal finance - it is often enough just to know what questions to ask. After that, learn to know where you're out of your depth and were some strategic advice would be useful.