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Old 06-03-2009, 01:10 PM   #21
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My understanding of the 72(t) exception is that it only works if I retire no earlier than 55. Therefore, since I am retiring at 52 I will not be able to withdraw before 59 1/2 so that point as I understand it will not impact the decision on whether to move my 401K. I do need to do that comparison of feels, however, before making final decision.
Rule 72(t) can be invoked from an IRA (NOT a 401K) at any age. You do have to continue with the SEPP distributions for at least five years or until age 59.5, whichever is later.

When you separate employment under age 55, you can immediately roll your 401K into a traditional IRA and use 72(t).

You may be thinking of the rule that allows penalty-free withdrawal from 401K plans at age 55-59 if you have terminated service in that year. That exception is not available for IRAs, but 72(t) is.

Much more about Rule 72(t) here:

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Old 06-03-2009, 01:17 PM   #22
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Originally Posted by fimk View Post
Tiu:

My understanding of the 72(t) exception is that it only works if I retire no earlier than 55. Therefore, since I am retiring at 52 I will not be able to withdraw before 59 1/2 so that point as I understand it will not impact the decision on whether to move my 401K. I do need to do that comparison of feels, however, before making final decision.
my understanding of the 72(t) exception is that if done properly it can be taken at any age. but the earlier you take it the riskier it is to your portfolio health if there is a major downturn in your portfolio value as once you start the WDs you arent allowed to change the WD amount (unlesss they changed that rule)
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Old 06-03-2009, 01:45 PM   #23
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what i did differently from your inputs was 1) not count the $180k as part of your portfolio but rather put it in as 6 years of $30k/yr income (2009-2014) and 2) started your SS in 2024. i reran it this morning (including your correct SS starting year) and i must have made an input error yesterday as now i get 100%. in fact i get that your starting WD for 100% is $68,674. i am so sorry to have worried you needlessly, good luck with your retirement
Hey JDW, no worry now, only thanks for confirming my numbers and finding me an extra $1K spending a year--maybe I can keep my expensive hair stylist, manicures...pedicures...!! No really I've left myself plenty of budget contingency but really good to have someone else looking at the numbers and coming to similar conclusion...thanks again!!
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Old 06-03-2009, 02:35 PM   #24
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Check out the Vanguard fund - not all High Yield Corp. funds are the same.
I agree the Vanguard HY fund is one of the better HY funds and in fact I own it to "juice" cash flow. I just didn't agree with your recommendation given to the OP of who's investment knowledge and risk tolerance I do not know. With more knowledge of the OP I could see adding a bit of HY to boost yield, just not 80%. I just wanted to counter your recommendation (which at the time was the only one) with something else to add balance. "Different strokes for different folks".
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Old 06-03-2009, 09:03 PM   #25
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Rule 72(t) can be invoked from an IRA (NOT a 401K) at any age. You do have to continue with the SEPP distributions for at least five years or until age 59.5, whichever is later.

When you separate employment under age 55, you can immediately roll your 401K into a traditional IRA and use 72(t).
Thanks, Ziggy.

While I don't have any intention of using 401K money before 59.5, it sounds like if I want to have this as contingency we are better to be in an IRA with Vanguard or Fidelity than staying with 401K.
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So What About the 'Soda Cracker' - what's it look like in 2009 vs 2005?
Old 06-07-2009, 07:41 AM   #26
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So What About the 'Soda Cracker' - what's it look like in 2009 vs 2005?

Ok guys so you've probably caught the drift by now that I'm a longtime computer geek with very little investment savvy....and I'm not blessed/ cursed with the testosterone level to want to be in direct daily control of my investments.

That said, at least for these first few years of ER, I'm thnking we are probably a prime candidates for the 'Soda Cracker' Portfolio in WLLM.

My 2005 edition of WLLM shows the funds to consider for such a portfolio as follows:

VSCGX - Vanguard LifeStrategy Conservative Growth 8.84% 20 year avg.

VWEHX - Wellington Fund, 8.33% since inception

In looking at Vanguard performance data, I see the following returns for these investments today:

VSCGX - 6.57% (Since inception 1994)
VWEHX - 8.3% (Since inception 1929)

VSCGX - -15.62 1 year, 4.21% YTD 2009
VWEHX - -8.18% 1 year, 19.59% YTD 2009


So based on the valuable info I'm hearing on this forum, and the data above, I'm thinking a very real option of going 'soda cracker' with my 750K longer term investment (450K 401K and 300K currently in CD's), possibly all to Wellington or a split between the two above.

In searching threads it appears that its been about 3 years since there's been any discussion on this type of strategy.

I'd appreciate any current thoughts on this strategy given my situation and also whether there are other such funds not mentioned in the 2005 edition, that should now be considered? (I looked at DODBX but it didn't seem to ride the meltdown as well as the two funds noted above and the .18% expense ratio for VWEHX is very attractive).
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Old 06-07-2009, 07:55 AM   #27
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Oops! The Wellington Fund should have been VWELX not VWEHX.

That puts expense ratio at .23
Performance since inception at 7.99%
Performance in last year -18.32%
Performance YTD at 5.06%
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