Other ways for pre 59.5 income

L1: Other ways for pre 59.5 incomeHello,
I am a 51 yr old retiree who has a retirement plan with the state. It”s about $1.4M and my plan was to roll it to a series of IRA”s for 72(t) distribtutions for my income needs.
I have been working with an advisor who has been great at educating me about all the laws and procedures for 72(t). This site has also been great to check back with.
Then the fun begins. Just to make myself feel better, I go and meet with another broker whom my co-workeres say “I gotta meet.” So I do and we discuss all the ways he can make me meny and how much income I can take. He mentions the number of about 10% income with no mention of the 10% IRS penalty. When I bring up the pre 59.5 IRS limits and 72t, he looks at me funny. He says I can take income as I need it without an penalty and the IRS can”t tell you what you can and can”t spend. He”s been doing this for years without a problem.

So my questions is this….Am I missing something here? Is there another way to take income from retirement monies w/o an 10% penalty besides 72(t)?? Is this broker for real??

Please help.2007-11-27 06:21, By: Fenton, IP: [71.1.244.180]

L2: Other ways for pre 59.5 incomeHello Fenton:
My counsel: Run (run faster if possible) from the “gotta meet” broker. Given your age (51) starting a SEPP plan is the only way to get material monies out of your IRAs over a period of years.
TheBadger
wjstecker@wispertel.net
2007-11-27 06:36, By: TheBadger, IP: [72.42.67.29]

L2: Other ways for pre 59.5 incomeThanks Badger….

Gfw…Any thoughts?2007-11-27 08:16, By: Fenton, IP: [71.1.244.180]

L2: Other ways for pre 59.5 incomeHe mentions the number of about 10% income …
This is a real warning flag! Withdrawals shouldbeno more than 7% per year of the account balance, andpreferably in the 4% – 6% range. 10% per year will wipe out an account, especially when the market goes down as in 2000 and possibly with the environment we are facing now.
… with no mention of the 10% IRS penalty. When I bring up the pre 59.5 IRS limits and 72t, he looks at me funny. He says I can take income as I need it without an penalty and the IRS can”t tell you what you can and can”t spend.
Fenton, I get the feeling that this new “broker”s” comments don”t pass your “smell test” and they definitely don”t pass mine. Is this person really in the securities industry or is he / she just an insurance agent? Too many unqualified people are holding themselves out as “Financial Planners” when they really have no clue what they are doing. From your description I suspect you may have found one. Now, what do you do. Re-read TheBadger”s comments, imagine he”s leading you in the race to get away from this person, and run with all of your mite to pass TheBadger and win the race!
He”s been doing this for years without a problem.
Really now! If he”s really been doing this for years “without a problem,” then his clients just haven”t been audited by the IRS yet. Remember, it”s the taxpayer who incurrs the penalties and not the advisor.
You should look for an independent, Registered Investment Advisor who understands 72(t) and sound, diversified investment strategies. They”re not hard to find.
Jim2007-11-27 12:32, By: Jim, IP: [24.252.195.14]

L2: Other ways for pre 59.5 incomeThanks Jim…..Good advice…..As always……Just need to get more of my co-workers to understand that this could be a disasterous situation. Thankfully, my current advisor in an independent RIA that has worked with 72(t) and investments for years. Has always done right by us.
Thanks again.2007-11-27 12:46, By: Fenton, IP: [71.1.244.180]

L2: Other ways for pre 59.5 incomeFenton: Another way to eliminate the 10 percent federal excise tax is to purchase an annuity. But I implore you not to do so because that means you have transferred the title to your 1.4 million to the insurer in return for a lifetime income. STICK WITH AN APPROPRIATELY DESIGNED SEPP.
Joel L. Frank
2007-11-27 18:01, By: Joel L. Frank, IP: [24.187.32.203]

L2: Other ways for pre 59.5 incomeHey Gang,
One more follow up question on this issue…..
Is there any way (or IRS rule) that says if you have an IRA and say your principle is $1.4M, you allowed to take out just your interest before 59.5 w/o a penalty? Example..The account makes say 9% interest in a given year. Can you take that9% out w/o penalty below 59.5 and leave the principle alone??
Thanks….
2007-12-04 05:21, By: Fenton, IP: [71.1.244.180]

L2: Other ways for pre 59.5 incomeA very short answer… NO2007-12-04 05:26, By: Gfw, IP: [216.80.125.206]

L2: Other ways for pre 59.5 incomeI thought so….As always, thanks for your help.2007-12-04 05:28, By: fenton, IP: [71.1.244.180]