EnricoPallazzo
Dryer sheet wannabe
- Joined
- Jun 20, 2019
- Messages
- 17
My wife and I are basically at our number based on every model I've run. So I have been looking at how we would move forward if we decide to add RE to our FI. However, one element of our planning that I haven't fully wrapped my head around yet is the utilization of assets from Pre-Tax and Post-Tax accounts when in ER. Approximately 40% of our investment assets are in Post-Tax accounts and 60% are in Pre-Tax accounts. I am 47, she is 45, so it will be about a dozen years before I am 59.5.
If our income stopped today there's more than enough in the post-tax accounts to cover our expenses for the next dozen++ years, but I'm wary of SORR and how that might have a compound effect if we're relying on only ~1/2 of our investment assets in the near-term.
I am curious how others may have approached this or any thoughts from the community. Three (non-mutually exclusive) options that come to mind are 1) do nothing - if it becomes a problem then take action; 2) start Roth IRA conversion ladders to shift funds from pre- to post-tax accounts; and 3) take 72(t) SEPP IRA distributions. And there's always 4) keep accumulating in post-tax accounts, increasing portfolio value, reducing SORR impact by further exceeding our number, and reducing time-to-59.5.
This is largely academic at this point since we're still working (basically doing #4), but I wanted to do a sanity check if I should be taking action now (e.g., starting a Roth IRA conversion ladder so those funds would be available without penalty in 5 years) should we decide to pull the cord.
If our income stopped today there's more than enough in the post-tax accounts to cover our expenses for the next dozen++ years, but I'm wary of SORR and how that might have a compound effect if we're relying on only ~1/2 of our investment assets in the near-term.
I am curious how others may have approached this or any thoughts from the community. Three (non-mutually exclusive) options that come to mind are 1) do nothing - if it becomes a problem then take action; 2) start Roth IRA conversion ladders to shift funds from pre- to post-tax accounts; and 3) take 72(t) SEPP IRA distributions. And there's always 4) keep accumulating in post-tax accounts, increasing portfolio value, reducing SORR impact by further exceeding our number, and reducing time-to-59.5.
This is largely academic at this point since we're still working (basically doing #4), but I wanted to do a sanity check if I should be taking action now (e.g., starting a Roth IRA conversion ladder so those funds would be available without penalty in 5 years) should we decide to pull the cord.