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Finding Professional withdraw advice
Old 10-26-2014, 08:00 PM   #1
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Finding Professional withdraw advice

How do I go about finding a flat fee professional to advise on the best way to access my substantial tax differed accounts before 59?

Do I look for a tax advisor, financial planner or an accountant?

I don't need them to sell me investment advice, just a second set of eyes to possibly give me different ideas on how to get my money out to spend.





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Old 10-26-2014, 08:59 PM   #2
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How do I go about finding a flat fee professional to advise on the best way to access my substantial tax differed accounts before 59?
If you really only care about how to get access to your money before you are 59 1/2, I think an accountant could tell you that. But usually the next thing to consider is downrange implications (i.e. what is the overall best way to mix the spending of these accounts with other withdrawals to minimize taxes/maximize the chances of your money lasting as long as you do). For that, maybe a good fee-only financial planner.

Me--I'd probably read up on this a bit, post a question here or at Bogleheads (after looking in their FAQs), and spend some time doing "what ifs" on spreadsheets and using FIRECalc. That way I'd have a real understanding of this important subject.
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Old 10-26-2014, 09:03 PM   #3
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You might look here for a financial planner.

Fee only FA's: www.napfa.org
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Old 10-26-2014, 10:04 PM   #4
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I'd go for a tax accountant. I have a financial advisor and I'm very happy with his advice but he's not a tax person. There's a lot to consider when trading off withdrawals from taxable vs. tax-deferred, Roth conversions, etc. I consider myself better-informed than the average taxpayer but it's all getting beyond my pay grade.
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Old 10-26-2014, 10:14 PM   #5
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I would look for a PFS, which is a CPA with a specialization in Personal Finance (aka Personal financial Specialist). You can search for one in your area here.
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Old 10-27-2014, 01:11 AM   #6
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I think the single best source of information on the net is 72t.net. The guy has written many articles on the subject. He is a CPA and published detailed information provided calculators and links to IRS ruling and tax court cases.
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Old 10-27-2014, 01:22 AM   #7
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If you're with Vanguard, you could try one of their CFPs.
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Old 10-27-2014, 06:24 AM   #8
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Oh thanks Vanguard sounds like a good starting place

DH and I have read and calculated a lot but a third set of eyes/ideas might find something we are missing. What we do now can make a dramatic effect on the total bottom line we are going to get to keep/spend versus giving to Uncle Sam

When 86% of your money is in IRAs the problem is getting access to it before 59 1/2, finding the after tax monies to pay for ROTH conversion taxes and minimizing RMDs bumping us into higher tax brackets





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Old 10-27-2014, 10:56 AM   #9
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I hear you. It's a common concern. My session with Vanguard's CFP was more helpful in this area than I expected. I now think I'll be able to figure out optimal withdrawals with the combined assistance of Vanguard's CFP and my tax preparer.
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Old 10-27-2014, 11:39 AM   #10
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You might want to also run this tool to get some thoughts going on this:
Retirement Calculator - Parameter Form

I found it helpful but it probably is not infallible. Got me to think about things like taking a lot of Roth money out now combined with IRA and SS money to keep the tax picture nice until RMD's.

It is wise to try to think ahead some years. Of course, future tax policy is never totally clear.
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Old 10-28-2014, 10:46 PM   #11
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At the risk of repeating an opinion I've offered in other circumstances: With these withdrawal strategies, I don't think the objective for most people should be "minimizing taxes" or even "maximizing withdrawals". For me, at least, the goal of the whole exercise is to minimize the risk of running out/low on money on later years. Now, when we start down the road of trying to fine-tune 401K or tIRA withdrawals to minimize future taxes, we have tp make a lot of assumptions about future tax rates, future tax brackets, and growth of investments. Even a tiny change can make a big difference in the optimum withdrawal strategy. And, honestly, none of us can accurately guess about tax policy or investment returns over the next several decades. So, trying to fine-tune this whole thing beyond a certain very basic degree is a fool's errand.

More importantly--our nest egg has to see us through decades of uncertainty. If I avoid paying taxes now, that's more money to serve as a cushion against that uncertainty. Maybe my investments will do terribly and we will have low withdrawals as a result: if still have a progressive tax system, then I won't pay much in taxes. On the other hand, if my investments do great, then when we are really old (and future financial uncertainty is reduced--'cause we're nearly dead), then I don't care much about paying a higher tax rate. The money served its purpose, we made it.

So, when trying to figure out how much to take out in tIRAs vs Roth IRAs, I bias toward paying the taxes in later years once in the grey area of the calculations.

Another thing to consider when running "what-ifs"--a surviving spouse. The std deduction and tax brackets are a lot lower when file single, and the tax bite is a lot bigger. If the finances will be a due to the taxes, this is an argument for keeping more money in the Roth and depleting the tIRA.
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Old 10-29-2014, 02:56 AM   #12
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Indeed interesting topic. I have often wondered with uncertainties of tax rates and mkt returns whether there is a similar couch potato or bogle heads approach to drawdown. Ie, asset dis-allocation (spend down) being simply take a percentage from traditional a percentage from Roth and a percentage from after tax accounts to meet needs and stay "diversified" from both current tax and future tax rate risk standpoint. Somehow it feels like drawdown will be THE topic for the next 25 years as boomers age and the financial charlatans are licking their lips and rubbing hands to get at that cash with "free" advice.

Am I too simple in this thinking ? So many variables. ACA subsidy. Tax rates. Social security. mWD. 72t. On and on.
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Old 10-29-2014, 06:03 AM   #13
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If you're with Vanguard, you could try one of their CFPs.
I'm pretty sure they won't provide any tax advice... they'll typically tell you to talk to your tax advisor.

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I think the single best source of information on the net is 72t.net. The guy has written many articles on the subject. He is a CPA and published detailed information provided calculators and links to IRS ruling and tax court cases.
+1
Lots of good info here on the 72t. Once you get a pretty good handle on how the 72t works, you could still sit down with a CPA to talk it through and help you with the mechanics.
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Old 10-29-2014, 08:34 AM   #14
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... I don't think the objective for most people should be "minimizing taxes" or even "maximizing withdrawals". ....

Another thing to consider when running "what-ifs"--a surviving spouse. The std deduction and tax brackets are a lot lower when file single, and the tax bite is a lot bigger. If the finances will be a due to the taxes, this is an argument for keeping more money in the Roth and depleting the tIRA.
I have calculated what a safe SPEND amount is so I don't outlive my funds. My OP is to discuss my next step of planning to minimize taxes paid to Uncle Sam.

When I'm refer to maximizing my withdrawals it not to spend it all, but avoid what you mention in your last paragraph and to minimized RMD's pushing us into what is the current 33% tax bracket. The extra withdrawal amount would be saved to a Roth to grow and ultimately be withdrawn tax free.

Right now the tax rates are at historic lows, so I want to withdraw (not spend) and pay current tax on it. I don't think rates will go any lower. This strategy however must be weighted by the loss of those "tax" monies versus allowing them to grow while being invested.
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Old 10-29-2014, 08:38 AM   #15
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I'm pretty sure they won't provide any tax advice... they'll typically tell you to talk to your tax advisor.

Lots of good info here on the 72t. Once you get a pretty good handle on how the 72t works, you could still sit down with a CPA to talk it through and help you with the mechanics.
Maybe not but it is sure good FREE starting point

With the current interest rates used to calculate 72t's there is no way I can withdraw even enough to meet my SWR. Plus it would tie up just about my whole IRA balance and I'd have to draw for 14 years until I'm 59 1/2. Unless the calculation rate goes up, 72t isn't a method that will work for me.
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Old 10-29-2014, 04:27 PM   #16
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I have calculated what a safe SPEND amount is so I don't outlive my funds. My OP is to discuss my next step of planning to minimize taxes paid to Uncle Sam.
And, taxes is part of spending. We all are endeavoring to calculate that safe spending rate, but there's always uncertainty since we can only go on a historical record that is almost certain not to match the future exactly. Keeping the nest egg as large as possible for as long as possible (be deferring the payment of taxes) might provide the bit of cushion needed to allow the money to last as long as you do. I'm not arguing for extreme measures (i.e. I plan to do Roth transfers before I start to draw SS, etc) but obsessing over a possible balloon in taxes when we are 95 because our portfolio did great and we have high RMDs--well, it seems like a problem I'd LIKE to have. By then I've won the game, and the nest egg has served its purpose admirably. Today, I've got 4-5 decades of uncertain trail ahead, so I won't go to a lot of effort to pre-pay taxes that I might later avoid entirely if the portfolio crumps.

Just another perspective. There's truly no way to optimize this withdrawal strategy to the Nth degree, because the assumptions have a drastic impact on the optimum strategy, and the assumptions are little more than guesses. So, I plan to do the common-sense big things (Roth conversion, watch the brackets during withdrawal and use the Roth to avoid higher ones, etc), but if I get hit with high taxes as a centenarian, that will be fine.
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Old 10-29-2014, 05:08 PM   #17
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Indeed interesting topic. I have often wondered with uncertainties of tax rates and mkt returns whether there is a similar couch potato or bogle heads approach to drawdown.
Vanguard does have a Managed Payout program (not sure if it is a separate fund) in which they will do a "snapshot" of your holdings on I think December 31, take 4% of that, divide by 12, and send out a monthly payment. I would imagine Fidelity and others have similar programs.

Pretty much a brain-dead way to handle it.
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Old 10-29-2014, 08:56 PM   #18
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Vanguard does have a Managed Payout program (not sure if it is a separate fund) in which they will do a "snapshot" of your holdings on I think December 31, take 4% of that, divide by 12, and send out a monthly payment. I would imagine Fidelity and others have similar programs.

Pretty much a brain-dead way to handle it.
And this fund was discussed in a recent thread:

Oblivious Investor/Mike Piper Looks at Vanguard's Managed Payout Fund
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Old 10-30-2014, 08:52 AM   #19
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Maybe not but it is sure good FREE starting point

With the current interest rates used to calculate 72t's there is no way I can withdraw even enough to meet my SWR. Plus it would tie up just about my whole IRA balance and I'd have to draw for 14 years until I'm 59 1/2. Unless the calculation rate goes up, 72t isn't a method that will work for me.
I am a bit confused. Using this calculator I get a withdrawal rate of 3.85% for a 45 year old. That seems to be the upper end of SWR for that long of a retirement. Now if you have large pensions kicking at 55, I can see how that might not be an accurate reflection of your retirement income.

It is generally recommended that you split your IRA in several separate IRAs to give you flexibility.

AFAIK the only other options are to bite the bullet and pay the 10% penalty.
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Old 10-30-2014, 10:08 AM   #20
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At the risk of repeating an opinion I've offered in other circumstances: With these withdrawal strategies, I don't think the objective for most people should be "minimizing taxes" or even "maximizing withdrawals". For me, at least, the goal of the whole exercise is to minimize the risk of running out/low on money on later years. Now, when we start down the road of trying to fine-tune 401K or tIRA withdrawals to minimize future taxes, we have tp make a lot of assumptions about future tax rates, future tax brackets, and growth of investments. Even a tiny change can make a big difference in the optimum withdrawal strategy. And, honestly, none of us can accurately guess about tax policy or investment returns over the next several decades. So, trying to fine-tune this whole thing beyond a certain very basic degree is a fool's errand.

More importantly--our nest egg has to see us through decades of uncertainty. If I avoid paying taxes now, that's more money to serve as a cushion against that uncertainty. Maybe my investments will do terribly and we will have low withdrawals as a result: if still have a progressive tax system, then I won't pay much in taxes. On the other hand, if my investments do great, then when we are really old (and future financial uncertainty is reduced--'cause we're nearly dead), then I don't care much about paying a higher tax rate. The money served its purpose, we made it.

So, when trying to figure out how much to take out in tIRAs vs Roth IRAs, I bias toward paying the taxes in later years once in the grey area of the calculations.

Another thing to consider when running "what-ifs"--a surviving spouse. The std deduction and tax brackets are a lot lower when file single, and the tax bite is a lot bigger. If the finances will be a due to the taxes, this is an argument for keeping more money in the Roth and depleting the tIRA.
Well said. I particularly like the bit about 'discounting' uncertainty when analyzing/choosing btwn multiple scenarios.

Samclem: I've used i-ORP, which is referenced in a post in this thread, and I find it to be a great tool to lay out a possible road map. But, my understanding of it from the scenarios I've run is that it will advise IRA/Roth IRA conversions early in retirement, which is a bit contrary to your advise on discounting future uncertainty. So, how do you do the analysis to account for (discount) the uncertainty? Is there a way to tailor i-ORP or another tool you've found?
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