life expect. vs. annuitization vs. amortization

L1: life expect. vs. annuitization vs. amortizationI am a 49 yr old federal employee retiring at age 50, I need to withdraw money from my qualified plan. I have been to seminars that are familiar with dstributions related to 72T but are not creative at all. They always refer to the life expectancy calculator from the IRS. This gives my 500k plan a payout that is insufficient for my needs.
They have never referred either the Amortization or Annuitization calculators (other than referring me to MetLife who has an associated lifetime annuity). Can I use these plans (Amort or Anuit)?, Can I plan out the distributions myself and have them sent from the fed, or do I need to have a written plan in effect for them to follow?
Also, in general can I use these plans at all? In a response to Meg on page 6 of the discussion board a reference is made to 1/1/03 and only using the life expectancy table after this date.2008-01-19 13:23, By: Jay, IP: [207.200.116.5]

L2: life expect. vs. annuitization vs. amortizationHello, Jay:
I”m not a federal employee and never have been one but would like to comment on your situation.
First, I would ask this question: Is there anything preventing you from rolling the money from your qualified plan into an IRA at a broker or mutual fund custodian of your choice and then setting up a 72t plan on that IRA? If not, then that might beone way to go.
Second, you comment on the qualified plan being “not creative at all”. I can appreciate that but am concerned about it as well. After all, was it not the “creative financing” of many banks that created the sub-prime mortgage mess? So much for “creativity.
72t payouts tend to be necessarily conservative. WIth the market jumping around like it is today, the last thing that any 72t plan owner needs is to deplete their account too early in their retirement. Numerous studies show that a withdrawal rate of not more than 6%, and preferrably somewhere in the 4-5% range has a much better chance of surviving for long periods of time. It”s not a pretty sight when the bulk of your retirement money expires before you do. Being in your70s or 80s when you run out of money is a thought that should give people pause to reconsider a withdrawal rate that is considered excessive by many who have crunched the numbers. I know that it did when I ran my 72t calculations.
To me, the bottom line seems to be whether or not you have sufficient resources to retire at age 50. You don”t mention health care and it is a HUGE issue for retirees. If you have a retirement health insurance program available to you at low cost then that could reduce the imapct ofthis issue on your retirement finances. If not, the consider that individual health insuranceplans areVERY expensive these days and that a husband and wife could be looking at $1000 a month (or more) for full coverage.
You could easily be looking at a retirement of 30 years or more here and that requires some SERIOUS money. Unless you have significant additional resources that you can tap or your needs are modest, I would question whether or not a $500k retirement war chest is sufficient. If not, then some additional years on the job may be necessary… and much easier to handle at age 50 than at age 80.
Ed_B2008-01-19 15:49, By: Ed_B, IP: [67.170.159.37]

L2: life expect. vs. annuitization vs. amortizationIt sounds as if you may have a “457 plan”. If so, you might want to look at www.457.net for answers.2008-01-19 18:11, By: dlzallestaxes, IP: [151.197.170.5]

L2: life expect. vs. annuitization vs. amortizationNever mind that I am a federal employee, or that I am retiring at age 50 (I have other retirement income).
Thanks
Jay2008-01-20 09:39, By: jay, IP: [70.7.41.32]

L2: life expect. vs. annuitization vs. amortizationJay:
I will assume you are referring to the TSP as your $500k retirement plan. Using the calculator on this site, plugging in $500k and using the default interest ratevalues, which happen to hit your age of 50, and changing to the Amortization method,then I get $31,887.76 as the annual amount you may receive from TSP. You will have todivide $31,887.76 by 12 = $2,657.31, then round down to $2,657 and request a monthly distribution from TSP for this amount. This assumes a distribution starting this month … January, 2008. If you delay then you will have to recalculate and it will probably be less for plans starting in February, 2008, since the 120% FMR for either December, 2007 or January, 2008 will probably go lower.
Since the Amortization method yields the greatest distribution amount, given this scenario it will be the most you can expect from a SEPP Plan using a $500k TSP.
Hope this helps.
Jim2008-01-21 08:44, By: Jim, IP: [24.252.195.14]

L2: life expect. vs. annuitization vs. amortizationYes, jim that is my exact situation, and Thanks!!!!

Jay2008-01-21 08:46, By: jay, IP: [207.200.116.135]