Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 10-26-2020, 06:20 AM   #21
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 2,991
Getting back to the original question (tax/IRMMA issues aside), I offer the following:

#1) The actuarial fair age-reduction is about 7% for each year a pension is drawn earlier than age 65

#2) Therefore if there was no employer subsidy, you pension would be reduced by about 35% if taken at age 60.

#3) Given that the reduction is only 20%, there is a significant employer subsidy that is being offered on the table for starting to draw the pension early.

Be sure to take this into account with along with the other issues.

-gauss

p.s.
Note also that we currently have a fairly wide 24% tax bracket that sits atop the 22% bracket until 2025. This is a a fairly small marginal increase of 2%. You may wish to use this to manage your long term IRMMA and tax-diversification goals while simultaneously drawing the pension early to take advantage of the employer subsidy. (That is basically what I am doing until TCJA expires).
gauss is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-27-2020, 06:49 PM   #22
Recycles dryer sheets
 
Join Date: May 2011
Posts: 85
Quote:
Originally Posted by Exchme View Post
With the pension only increasing 4% per year at age 60, I think you are better off to take it now. Seems like the value of Roth conversions, staying below IIRMA thresholds, etc. are secondary issues. Face it, you are going to be wealthy and going to be taxed like it!
Thanks Exchme for your take. Our analysis has led us to this conclusion as well in taking the pension now but are still working through the secondary Roth conversion issues. As for your last statement, still ugh!
bpgdeg1234 is offline   Reply With Quote
Old 10-27-2020, 06:59 PM   #23
Recycles dryer sheets
 
Join Date: May 2011
Posts: 85
Quote:
Originally Posted by gauss View Post
Getting back to the original question (tax/IRMMA issues aside), I offer the following:

#1) The actuarial fair age-reduction is about 7% for each year a pension is drawn earlier than age 65

#2) Therefore if there was no employer subsidy, you pension would be reduced by about 35% if taken at age 60.

#3) Given that the reduction is only 20%, there is a significant employer subsidy that is being offered on the table for starting to draw the pension early.

Be sure to take this into account with along with the other issues.

-gauss

p.s.
Note also that we currently have a fairly wide 24% tax bracket that sits atop the 22% bracket until 2025. This is a a fairly small marginal increase of 2%. You may wish to use this to manage your long term IRMMA and tax-diversification goals while simultaneously drawing the pension early to take advantage of the employer subsidy. (That is basically what I am doing until TCJA expires).
Thanks gauss, our analysis has led us to this conclusion. We are planning on doing Roth conversions to the top of the 24% tax bracket for 4 years and then we'll likely relook at where we're at and then decide whether to continue doing the same until the end of 2025 and just live with the IRMAA surcharges for a few years when I turn 65 near end of 2025.

If plan goes well we will have the vast majority of the tIRA converted by then where we should then remain in the 22% tax bracket (or to the reverted 25% tax bracket if current brackets aren't extended).
bpgdeg1234 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Take Capital Gains or do Roth Conversions? popntx FIRE and Money 18 12-03-2018 04:50 AM
What is the best way to defer taxes to future years? ShokWaveRider FIRE and Money 14 09-22-2018 02:09 PM
Tax Time - 2010 Roth Conversion opted to defer tax and now in different state Aeowyn FIRE and Money 2 03-23-2012 08:13 PM
how to tax defer more $$ smjsl FIRE and Money 25 02-03-2010 06:00 PM
Defer profits from new business Da Nag FIRE and Money 1 02-11-2008 12:25 PM

» Quick Links

 
All times are GMT -6. The time now is 01:23 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.