Fermion
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Decided to make a new, hopefully none cluttered thread about our personal need for a 72t during our retirement.
Background: Initially, I was going to do a Roth ladder but we had some big capital gain years in taxable during our first few years of retirement and I didn't convert as much to Roth as I had planned because of the higher tax bracket.
We have had a bigger drawdown of taxable than planned because of the increase in costs in building a house (even though we are doing all labor, it is just ridiculously expensive now to build). We could try and get some of the money back out of the house but I rather like the idea of a steady stream of income from our 401K (plus maybe it provides a source of income for banks if we ever do need a loan).
Our 401k has grown a lot, and I have $300,000 of it in cash (some lucky market timing of the recent crash....was planning on moving it to bonds when I shifted it a few months ago but never got around to it).
So, according to the calculators, if we set up a 72t with $300,000, we could get a payment of about $19,000 per year. This would be below ACA income level for the best cost sharing subsidy but we could do conversions on other accounts to get up to the ~$25,000 taxable income level needed. If we set it up with $400,000, we could get a payment of about $25,000 per year (we are age 53 (primary) and 52). We have enough taxable money left (unless sheetrock goes to $300 a piece) to supplement that income to what we spend each year until age 59.5. Worst case we can also do a heloc once our home is finished, or sell some timberland we own.
First questions:
1) When do we need to do this if we want the first $25,000 to come for this current tax year?
2) Can you switch from an annual lump sum payment to monthly installments (monthly might be better for the silly banks to think you have stable income?)
3) Do we just direct Fidelity to split off $400,000 from our 401K into a IRA and then set up the 72t on the IRA?
Background: Initially, I was going to do a Roth ladder but we had some big capital gain years in taxable during our first few years of retirement and I didn't convert as much to Roth as I had planned because of the higher tax bracket.
We have had a bigger drawdown of taxable than planned because of the increase in costs in building a house (even though we are doing all labor, it is just ridiculously expensive now to build). We could try and get some of the money back out of the house but I rather like the idea of a steady stream of income from our 401K (plus maybe it provides a source of income for banks if we ever do need a loan).
Our 401k has grown a lot, and I have $300,000 of it in cash (some lucky market timing of the recent crash....was planning on moving it to bonds when I shifted it a few months ago but never got around to it).
So, according to the calculators, if we set up a 72t with $300,000, we could get a payment of about $19,000 per year. This would be below ACA income level for the best cost sharing subsidy but we could do conversions on other accounts to get up to the ~$25,000 taxable income level needed. If we set it up with $400,000, we could get a payment of about $25,000 per year (we are age 53 (primary) and 52). We have enough taxable money left (unless sheetrock goes to $300 a piece) to supplement that income to what we spend each year until age 59.5. Worst case we can also do a heloc once our home is finished, or sell some timberland we own.
First questions:
1) When do we need to do this if we want the first $25,000 to come for this current tax year?
2) Can you switch from an annual lump sum payment to monthly installments (monthly might be better for the silly banks to think you have stable income?)
3) Do we just direct Fidelity to split off $400,000 from our 401K into a IRA and then set up the 72t on the IRA?
