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View Poll Results: Do/did you use a SEPP plan?
I currently use a SEPP plan and am under 40 years old 0 0%
I currently use a SEPP plan and am under 50 1 2.38%
I currently use a SEPP plan and am under 55 0 0%
I currently use a SEPP plan and am under 59.5 4 9.52%
I had a SEPP plan, but busted it 0 0%
I had a SEPP plan, but I am finished with it 2 4.76%
I considered a SEPP plan, but chose not to use one 6 14.29%
I do/did not need a SEPP plan and did not consider one 23 54.76%
Something else (explain if you wish) 6 14.29%
Voters: 42. You may not vote on this poll

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Poll:Your SEPP thing
Old 12-06-2016, 11:57 AM   #1
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Poll:Your SEPP thing

I didn't see a poll on who is using a SEPP plan (if you don't know what it is, then you are not using it. ), so I thought it might be interesting to have a poll.

I have some impressions about SEPP plans, but I won't bias things until the poll has been out there awhile.

Thanks for voting!

[Hmmm, maybe the poll should have the age you started your SEPP plan and not your current age.]
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Old 12-06-2016, 01:27 PM   #2
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I retired early at 55 but had a pension to cover the basic needs so never needed to consider an SEPP.
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Old 12-06-2016, 07:55 PM   #3
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I voted something else. I'm planning on retiring by 55 at the latest. But I'm hoping to be out by 50. 90 to 95% of my money will be in pre-tax accounts. So if I have enough beofre 55 to get out of megacorp I will leave and start a SEPP.
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Old 12-07-2016, 07:32 AM   #4
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I considered 72(t)/SEPP to get me to age 59 1/2 but then realized I could do this via Roth in a much more simple and lower risk way.

Our 401k(s) allowed significant after-tax contributions that could later be rolled over to IRAs. By maxing this out we transferred nearly all of our after-tax savings into Roths.

Roth IRAs are tap-able, without penalty, prior to age 59 1/2 if you track your basis in your Roth contributions and Roth conversions (and rollovers from qualified employer plans). You will need to observe the 5 year waiting period(s) before withdrawing any funds from a conversion/rollover (from employer plan). This will only apply once you have withdrawn all your Roth contributions since contributions are assumed to be distributed first.

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Old 12-07-2016, 07:47 AM   #5
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Quote:
Originally Posted by gauss View Post
I considered 72(t)/SEPP to get me to age 59 1/2 but then realized I could do this via Roth in a much more simple and lower risk way.
.
.
Roth IRAs are tap-able, without penalty, prior to age 59 1/2 if you track your basis in Roth contributions and Roth rollovers and you wait 5 years between the contributions/conversion and the subsequent withdrawal.

-gauss
Nice idea.

If one left an employer at 50 and rolled over their 401k to an IRA they could do a Roth conversion of, say, $20k every year and from age 55 start withdrawing $20k/year with no penalty. Seems too good to be true but is probably a legal way to draw funds without penalty before age 59.5
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Old 12-07-2016, 08:31 AM   #6
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Originally Posted by Alan View Post
Nice idea.

If one left an employer at 50 and rolled over their 401k to an IRA they could do a Roth conversion of, say, $20k every year and from age 55 start withdrawing $20k/year with no penalty. Seems too good to be true but is probably a legal way to draw funds without penalty before age 59.5

I think the 5 year waiting period(S) (to avoid 10% penalty) applied to Roth rollover/conversions is intended to prevent spending down retirement funds prior to age 59 1/2 for short-term needs.

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Old 12-07-2016, 08:50 AM   #7
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I think the 5 year waiting period(S) (to avoid 10% penalty) applied to Roth rollover/conversions is intended to prevent spending down retirement funds prior to age 59 1/2 for short-term needs.

-gauss
Intention is one thing but does the law allow it? Academic question as I am in my 60's but it could be an alternative to an SEPP.
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Old 12-07-2016, 10:31 AM   #8
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With only 10% of our investable assets in IRAs, we never needed to draw on them to retire early.
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Old 12-07-2016, 10:50 AM   #9
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With only 10% of our investable assets in IRAs, we never needed to draw on them to retire early.
+1. We also only have 10% of our assets in IRAs and we don't expect to tap them until we are in our 60's.
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Old 12-07-2016, 11:13 AM   #10
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+1. We also only have 10% of our assets in IRAs and we don't expect to tap them until we are in our 60's.
We're pretty much waiting until RMDs at 70.5.
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Old 12-07-2016, 11:35 AM   #11
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We're pretty much waiting until RMDs at 70.5.
That will probably be the case for us too, although we may convert our IRAs to Roth IRAs before we even make it to 70.5.
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Old 12-07-2016, 11:59 AM   #12
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I had planned for SEPP, but turns out our taxable account grew much faster than expected in the years leading up to ER at 52. So we use that to supplement pensions and rental income. Depending on SS timing and other things, we probably won't touch tax-deferred until FRA or 70.5. Converting what we can to Roth in the meantime.
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Old 12-07-2016, 01:25 PM   #13
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That will probably be the case for us too, although we may convert our IRAs to Roth IRAs before we even make it to 70.5.
Well - if I can get our income below AMT rates, or if AMT magically goes away (as a few folks seem to be hoping), then we might have a chance to do Roth conversions before 70.5. Otherwise there is no clear benefit.
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Old 12-07-2016, 01:26 PM   #14
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Quote:
Originally Posted by Alan View Post
Intention is one thing but does the law allow it? Academic question as I am in my 60's but it could be an alternative to an SEPP.

Fairmark.com has a nice discussion of the rules allowing this (Distributions after Roth conversion) here:

Distributions After a Roth IRA Conversion - Fairmark.com Fairmark.com

Section 408a of the Internal Revenue Code is the main governing law for Roth IRAs. 408A(d)(3)(F) in particular describes the 5-year waiting period after a conversion to avoid the 10% penalty described in section 72(t).

IRS Publication 509B Ch 2 Additional Tax on Early Distributions also addresses this.

-gauss
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Old 12-07-2016, 02:28 PM   #15
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My wife and I used a SEPP plan starting when we were 55 and stopped the SEPP when we hit 60.
The SEPP worked great for us and we are now 67 and 68. Our spending has gone down 50% since 2010 due to reduced travel. The SEPP funded our travel when we were interested in traveling and physically able to travel.
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Old 12-07-2016, 08:22 PM   #16
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Quote:
Originally Posted by gauss View Post
Fairmark.com has a nice discussion of the rules allowing this (Distributions after Roth conversion) here:

Distributions After a Roth IRA Conversion - Fairmark.com Fairmark.com

Section 408a of the Internal Revenue Code is the main governing law for Roth IRAs. 408A(d)(3)(F) in particular describes the 5-year waiting period after a conversion to avoid the 10% penalty described in section 72(t).

IRS Publication 509B Ch 2 Additional Tax on Early Distributions also addresses this.

-gauss
Excellent, thanks for this.
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