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L1: SEPP-72TRetiring next April. Federal Law -Enforcement =Early retirement. Age 50.Would love to use the annuity or interest on $300.000 that is currently in the government thrift program to go with my pension without tax penalty. .Looking at transferring all $300.000 to a IRA and then look to a SEPP (72T). Would hate to let the money just pile up until I am 59 1/2. Could really use it in my 50’s for a more comfortable retirement. No lifetime annuities.Recommendations? Suggestions?2010-09-09 02:50, By: TWISTSTEEL, IP: []
L2: SEPP-72TOf course, the most basic question here is how much of your retirement assetsyou spend prior to 59.5 vrs. saving for later years. You should plan to be around for 40 more years, at least to start with unless youdevelop serious health issues.
You also do not have to use the entire 300k for a SEPP. You might set it up with an IRA containing half that amount and save the other 150 k in a separate IRA to generate more tax deferred earnings or for emergencies.
You said “no lifetime annuities”, but isn’t your pension a life annuity? And if you are in the SS system, that will also be a life annuity with a COLA after your SEPP is over with.
The tough part here iscoming up with an amount you can plan to live on for 10 years. It is difficult to know what your costs will be the longer yourSEPP is in operation, and 10 years is along term for a SEPP. The planning is the most challenging part, the actual calculations are fairly easy, but should be triple checked for accuracy.
Note that it is possible to take a SEPP directly from the TSP, but we always recommend against it because the TSP does NOT provide any SEPP plan support. You would have to use the fixed installment plan and then hope that the TSP does not have any rules changes before your 10 years is up which would derail your plan. Too many risks here, so we recommend the IRA rollover even though your investment expenses in the IRA will bound to be somewhat higher than the extremely lowTSP expense ratio.2010-09-09 03:12, By: Alan S., IP: []