jazz4cash said:72T is a great way to go, check www.72t.net. The trick is to guestimate what your shortfall will be, then put that amount into a seperate IRA, and annuitize that IRA. There is also a lot of flexibility in the assumed interest rate for the annuitization and various methods to select. You generally must stick with the SEP Plan 5 yrs or till age 59.5.
You can also avoid penalty for 401k withdrawal if seperated from employer at age 55........I've seen several interpretations on this one.
A third exception is for home purchase expense, 1st time homeowner, I believe.
College expenses for dependents are also excepted from the penalty (my favorite!)
Medical expenses above the schedule A threshold are also excepted, I think
Tax code is ridiculous until you find the right loophole, then its not so bad
jazz4cash said:You can also avoid penalty for 401k withdrawal if seperated from employer at age 55........I've seen several interpretations on this one.
gindie said:Do you have to separate at exactly age 55 or can it be 56, 57, etc.? I've never gotten clarification on this.
gindie said:Do you have to separate at exactly age 55 or can it be 56, 57, etc.? I've never gotten clarification on this.
jazz4cash said:Tax code is ridiculous until you find the right loophole, then its not so bad
REWahoo! said:What Connie said. I found this at the 401khelpcenter.com
There is an exception to that rule [the 10% penalty], however, which allows an employee who retire, quit or are fired at age 55 to withdraw without penalty from their 401k.
There are two key points early retirees need to know. First, this exception applies if you leave your job at any time during the calendar year in which you turn 55, or later, according to IRS Publication 575.
Second, you can only take money from the 401k plan of your last employer. That means if you left money in the plan of a former employer, you'll have to wait until age 59½ to start taking withdrawals without penalty.
crazy connie said:But, if you severed before age 55 from an employer (think Mega-Corp) and then roll your funds to a new employer (think Circle K, Walgreens, etc..) and sever in year of age 55... BINGO you meet the criteria. I am contemplating that right now with a basic McJob. I am just nervous about locking in on 72T Distribution for 5 years.
jazz4cash said:Not sure what the nervousness relates to, but I believe you can re-roll the SEP one time within the 5 years. There are various other strategies to mitigate certain issues. The thing to be nervous about is not following the requirements such that the penalty for early withdrawal is reinstated for all the monies withdrawn.
crazy connie said:You can change the method one time and only to the lowest payout level (Minimum Distribution Method) as I understand the regulations. My nervousness is only in tapping too much and having several down years in a row or not enough and then being short. During the 5 to 7 years I would be on a SEPP plan it is likely my housing will downsize and that will be a healthy cash infusion. I am debating breaking the IRA funds into more than 1 pot. As in 1 for SEPP stating in 2009 and a smaller one held in abeyance and for ROTH conversions.