how many young folks are taking advantage of 72t?
L1: how many young folks are taking advantage of 72t?I am 35, and I plan to take a SEPP distribution around 42 or 43, and I wondered how many folks in their early 40’s have or are utilizing 72t’s as a way to get to their money early.
I just recently found out about this option and I can’t believe how good it seems (hopefully I am not missing something).
Here is my plan, my balance should be about 400k by age 42, and I should withdraw about 13k / year. My wife will likely still be working and will make around 25k, for a combined income of 38k and keeping us in the 10% tax bracket. We also should have 100k in a ROTH that we can use if need be.
I plan to keep my ira in my mostly stock mutual fund and hope to get 7%, so at age 59.5 the balance would be 1.4 million.I’d be curious others thoughts, as this sounds too good to be true, the only negative is that I can’t withdraw more from my ira than 13k.
Any one think I am crazy, or way off base? Thanks!2015-03-25 17:42, By: des999, IP: [18.104.22.168]
L2: how many young folks are taking advantage of 72t?I doubt that there are any people that use SEPP 72-T plans until they are 50 by design while still working.
I would never recommend it to anyone because there is too much of a chance that the person will need some more money in the 17 years before age 59 1/2, and will owe a fortune in the 10% PENALTY on all of the distributions until then.
If you decide to go this rout, set aside $ 50,000 in a separate IRA account that you can tap for emergency funds periodically until you are 59 1/2.
Since the 15% tax bracket goes to $ 89,000 I figure that you are planning to keep working at your $ 50,000/year job.
What will you do if your wife loses her job, or she becomes disabled ? How will you replace that $ 25,000 ? Do you have disability insurance on yourself and your wife ?
To answer your last question — YES, I THINK YOU ARE CRAZY, OR AT LEAST YOUR IDEA IS CRAZY.2015-03-25 17:55, By: dlzallestaxes, IP: [22.214.171.124]
L2: how many young folks are taking advantage of 72t?you need to have a contingency plan in case something goes wrong, which odds are greater being that far out. What if your stock portfolio takes a 20-30% hit, can you acutally ride it out. Getting an average 7% still subjects you high variability in returns. What about changes in spending and inflation, will 38k be enough 15 years from now.Doesn’t hurt also having financial assets outside of ira’s (brokerage or bank).2015-04-11 05:32, By: brkr12002, IP: [126.96.36.199]
L2: how many young folks are taking advantage of 72t?I’m also 35 and plan to take a SEPP distributionupon retirement which I hope will be no later than when I am 52. I’m also very happy I have found this exception. I’m very lucky that I have been investing in my 401K since I began my career at 22.2015-05-19 16:10, By: TGUN, IP: [188.8.131.52]
L2: how many young folks are taking advantage of 72t?I started mine at the age of 45, I am getting 5 installments from my ESOP (one per year), I have 3 72t’s going right now and after this 4th one I will retire at the age of 48. Then I plan on doing a 5th one also.
I would set aside some money in a qualified IRAlike someone suggested, I will set aside 50K this year and 50K next year for emergency money. I wouldn’t rely too much on 7% and/or your1.4 million.
Get yourself a good financial advisor too.2015-05-29 03:35, By: Ramg66, IP: [184.108.40.206]