Please help me optimize a plan starting possibly in January or July 2019

You are here:
  • KB Home
  • Please help me optimize a plan starting possibly in January or July 2019
< Back

L1: Please help me optimize a plan starting possibly in January or July 2019
Thanks for all you do, and all the information you provide. Yes, it is very complicated and information is not easily found (it is easier to find pie in the sky information on F.I.R.E.). In reality, it is probably quite simple. This may be a long post however I want to provide a complete picture for any opinions and advice. I quit working about 5 years ago, primarily for a combination of some health issues, and possible bad job burnout. At my age, it will be nearly impossible to go back to work full time doing what I did for over 20 years. IF anything, most likely employment for me will be low stress part time work. I do have some good fortune, my health issues have stabilized for now, and my wife works with full benefits (namely a good health insurance plan). I started saving over 40 years ago, although I did not plan for this early drop in income. I have been quite frugal and paying my share of expenses from my savings. Our house is not paid off yet (5yr? left) and my vehicle is not paid off yet (2yr left). My investment returns have been quite poor, as I am nervous still about all involved and have been too conservative. I have been now about 60% cash/income and 40% equities for about 2 years. My ‘share’, or should I say fair share of expenses is currently about $24,000 annually. I am having a difficult time as I compare myself to my previous income and to friends and family. I have utilized several calculators, and I have been impressed with FIRECalc to suggest I can do this. Please help me optimize a plan starting possibly in January or July 2019. My hypothetical plan utilizes my taxable accounts and new SEPP/72t from my largest IRA summarized below. Please suggest if and when I start to optimize this plan as I know it is a five year plan or IRS issues. Anonymous please, and standard disclaimer! Thanks in advance.
Date of Birth= July 1, 1964
NEW SEPP/72t start date = something like January 15, 2019 or July 15, 2019
all values approx, interest bearing checking = $30,000
taxable brokerage account (high yield cash)= $47,467
roth conversion ira = $45,295
roth contributory ira = $63,762
rollover ira (source of my SEPP/72t?) = $272,393
begin social security at age 62, IF not taxed excessively due to other income?
SEPP/72t calculations with rollover ira ($272,393 in July 2019 at 3.25%) = $14,466
SEPP/72t plus checking/brokerage= within my budget for several years
end result and status of possible plan = success? should I plan on using other ira also?

any opinion and advice is greatly appreciated
2019-01-07 16:48, By: Alpha1978, IP: []

L2: Please help me optimize a plan starting possibly in January or July 2019
What you are asking for is a full consultation with a financial planner and/or a qualified tax professional who understands SEPP 72-T.
Briefly, I would try to not touch your ROTH IRA accounts because they accumulate tax free forever.
I would carefully consider the various approaches to SS benefits. Usually it makes sense to defer to age 70 in order to get significantly higher benefits over the combined income of you and your wife. There are strategies involved which are beyond this forum.
Based upon your joint taxable income after age 59 1/2, it often can be a great time to take IRA distributions, rather than SS benefits.
2019-01-07 19:30, By: dlzallestaxes, IP: []

L3: Please help me optimize a plan starting possibly in January or July 2019
Yes, I have tried to discuss with about ten experienced financial advisors, only one had a clue and said my plan looked good however he suggested I try to work longer rather than this SEPP/72t, and several CPA/tax accountants who mostly said they do not get involved with setting up or recommending SEPP/72t, however they would of course do my taxes with 1099-R and their high fees. Thank you for recommending that I not touch my roth accounts.
Can I be fairly comfortable with my plan based on what I read in the “By:SKRAM, on 2018-12-04 18:30, Views:194, Replies:6, Last Reply on:2019-01-03 01:19” forum posting, especially “L7: Final Calculations”? That situation is very similar? If I take my first annual in July 2019, I would have FIVE annual payments, and then modify?
Thank you again.
2019-01-07 21:09, By: Alpha1978, IP: []

L4: Please help me optimize a plan starting possibly in January or July 2019
If you do not plan to make any changes, or need money, you can start your plan soon, or wait until July 15, 2019. Usually if people plan to end at 59 1/2 or 5 years, then starting sooner will end the plan sooner.
Even though you take 5 ANNUAL payments, the plan still must last at least 60 months before ending.
The key for 2019 will be how much money you want/need, and when. At any time during 2019 you can take the FULL Annual distribution. Otherwise, you can take only a pro rated amount in 2019. What you do depends upon your joint TAXABLE income in 2019.
At the other end, there is significant planning to be done between 62 and 70. The SS benefits at 62 are 75% of age 66. The SS benefits at age 70 are 75% HIGHER FOR LIFE OF YOU AND YOUR WIFE than at age 62 because of the 32% bonus for waiting to age 70!!!
In addition, taking your IRA distributions when you do not have SS benefits from 62-70 will probably reduce your RMD after 70 1/2. Also, only a maximum of 85% of SS benefits are taxable, so by deferring until 70 will mean more SS benefits are not taxable.
2019-01-07 21:42, By: dlzallestaxes, IP: []

L5: Please help me optimize a plan starting possibly in January or July 2019
I hope it is okay to post a follow-up question here like this. Thanks you for the reminder of increased social security benefits and tax advantages by waiting longer than age 62. While I am looking at details of this possible new plan and the maximum interest rates for 72t (3.69% for February 2019 versus 3.lower% for July 2019), would I be better off starting my distribution in February 2019 or July 2019? I have other cash assets to pay bills until July 2019, possibly into 2020 if to my advantage, and my wife is still working. And just for my clarification, would I be looking at FIVE annual distributions before I could modify the plan (2019, 2020, 2021, 2022, 2023)? Thank you again, in advance.
2019-02-09 15:37, By: Alpha1978, IP: []