Amount of monthly distribution
L1: Amount of monthly distribution Just found this forum and I am about as new to the 72t as you can be. Therefore I don’t have exact dates to give you. I’m 51, d.o.b. is 11/19/62. I’m thinking about starting the 72t in November of 2014. I was introduced to the concept of the 72t by a financial guy last week. (I told you I’m new) I have roughly 900k combined in a 401k and and IRA. My finance guy is telling me I could get roughly around $3500 per month after taxes. Sounds like a slam dunk to me. Question #1 Does this sound right or at least close? Question #2 What will the $900k look like 7 1/2 years from now? Question #3 if he’s way off base with the calculation what WILL the monthly after tax take home be? And last question. Is this 72t option a reasonably intelligent way of accessing my money for an early retirement? Bringing me back to question 2 will there be enough left for a decent retirement after 59 1/2? Glad I found this forum. Thanks. Bob2014-02-17 20:36, By: Bob, IP: [184.108.40.206]
L2: Amount of monthly distribution Bob,
I would suggest you start by reading a lot more about the 72(t). Are you retiring or just trying to tap into your 401k and IRA? Your after tax take home is going to be based on your annual income bracket. Based on using the full $900k and a first distribution date of 11/1/2014, I get about $3221 per month before taxes. If you took out an estimated 25% for state and fed taxes, that would just leave you with $2415/month for the entire 7 1/2 years.
Do you know when you can get your money from your 401k? Some companies won’t even let you withdraw any money until you’re 55.
If you are retiring, most people don’t recommend using the full $900k, but break it into two so that you have a reserve to use to make emergency withdrawals.
I would suggest you read all of the information that they have here on this site first, search the forum a little, and learn a lot more about this. Once you start you will be locked in for the 7 1/2 years and if you make any changes during that time you will “bust the plan” and owe 10% of all the money that you had taken. Meaning that if you got 5 years into the plan, you would have taken $193, 273 and would end up owing 10% of that amount.2014-02-17 20:57, By: Red Baron, IP: [220.127.116.11]
L2: Amount of monthly distribution Start with the calculator athttp://72t.net/72t/Calculator/Distributionsand you can answer a lot of your own questions. Just use the default values and plug in your date and amounts.
After tax? No clue since we have no idea what your tax situation is. With that said, your pre-tax payment would be just over $3,000 – no idea where you “financial advisor” is getting their numbers. However, based on what you said in your post, I would check anything that he/she gives you.
2014-02-17 21:05, By: Gfw, IP: [18.104.22.168]
L3: Amount of monthly distribution How much is in your 401-K?
How much is in your IRA ? Was it all tax deductible contributions, or were there any non-deductible contributions ?
Are you planning to retire now , or continue to work ?
Did your new financial guy tell you that you can probably retire in January 2017, i.e. the year in which you will become 55, and start to take distributions of any amount FROM YOUR 401-K (ONLY) without being subject to the 10% penalty ? If he didn’t, I would change advisor. I suggest that you check with your 401-K administrator if they allow distributions in the year you will become 55, or only after you become 55, or whatever their requirements are.
If they allow them, I would suggest starting the SEPP 72-T with only your IRA to supplement your income for the next 3 years while you continue to work at your company, if possible. Meet with a QUALIFIED financial advisor or tax practitioner who understands the related regulations about early distributions. All of this is covered on this website, but you need someone to structure the retirement plan for you, including the advantages of deferring your Social Security benefits until age 70, and get 70% per year more than at age 62 while taking distributions from your 401-K and IRA (after age 59 1/2).2014-02-17 22:44, By: DLZALLESTAXES, IP: [22.214.171.124]
L2: Amount of monthly distribution Thanks very much to all of you for responding to my question. I’m going to the advisor agin soon and I’ll be armed with a better understanding. Thanks again.
2014-02-20 22:33, By: Bob, IP: [126.96.36.199]