72t SEPPs to bridge the gap

[FLSUnFIRE]

Yes, this is true. Hopefully if using the Fixed Amort. Method the person has some extra savings on the side to supplement income when needed.

I guess the problem I see with using the RMD method is when you are trying to control your income for ACA premium credits.

Totally agree, holding off on starting the SEPP until I have a better idea of my income in ER and see how the first couple years shake out (so far inflation is pretty gnarly). Really though, if my portfolio grows quickly enough I'll be happy to bust the MAGI and will worry instead about BTD!

 

[arcyallen]

DW and I have very similar account balances in Roth, Simple and Sep accounts.

Don't forget: You can pull the principle out of your Roths at any time, for any reason, with zero penalty. Depending on balances that alone my solve your problem, or at the very least give you flexibility when considering a 72t. An often overlooked benefit of a Roth!

 

[armor99]

Rule of 55 is only available from a 401k with the last j*b you separate from. Doesn't work for IRAs, old 401ks, or as far as I can figure out, a solo 401k. Different downsides, and not necessarily better than 72T, IMHO.

Actually… there is a very cool thing you can do if your company allows it. You will have to call to find out. You CAN do a reverse roll over from an IRA to your current companies 401k plan… and then use the rule of 55. My company allows this and it is part of my strategy when I plan to retire at 55.

 

[JeKa]

DW and I are planning on being in the class of 2024 at the age of 54. After all of the retirement calculators, reading and planning, we felt we were in good shape, but just wanted a second opinion. Sure, you can always go back to work (if you want to), but this is one of the biggest decisions of our lives and we want to get it right. Our accountant recommended a fee only FP to look over our situation, who after meeting with, we hired and yes, he agrees we are in good shape.

One of the key components of his plan for us, to at least bridge the gap, between ER and turning 59 1/2 is the use of 2 72tSEPPs. One for each of us. DW and I have very similar account balances in Roth, Simple and Sep accounts. I believe the idea of using 2, instead of just one of ours is to not run down just 1 account with bigger withdrawals and spread the risk, should something happen with t2he withdrawals of not being taxed on just 1 account.

I’m curious, is anyone using 72tSEPPs to help them to get to 591/2?
Which method did you choice and why ?
Do you take your payments monthly, quarterly or as 1 annual lump sum ?

Just curious, does your company that you have your 401Ks with allow withdrawals w/o penalty @55? You would still pay the taxes on the withdrawal but no early penalty. That would be an alternative to the 72Ts which don't allow you to change the amount of withdrawal for the 5 years to get to 59 1/2. If the company allows that you just have to retire in the year that you turn 55.

 

[2cheap2eat]

Rule of 55 is only available from a 401k with the last j*b you separate from. Doesn't work for IRAs, old 401ks, or as far as I can figure out, a solo 401k. Different downsides, and not necessarily better than 72T, IMHO.

In a lot of cases, you can roll in rollover IRAs and 401k’s at other employers.

Also, I believe you can start rule of 55 in the calendar year you turn 55, not your actual birthday (need to confirm that).

 

[Yoheadden]

Don't forget: You can pull the principle out of your Roths at any time, for any reason, with zero penalty. Depending on balances that alone my solve your problem, or at the very least give you flexibility when considering a 72t. An often overlooked benefit of a Roth!

Yes, thank you.
This is part of our plan as well. Draw from the 72t accounts up to the standard deduction and pull from the principal from the Roths and a little from after tax to manage taxes and ACA premium credits.