tax and 72t calculator

L1: tax and 72t calculatorWhen using your 72t reverse calculator it asks for the annual yearlypayment desired. Should I included the Federal and State taxes that would be due or will the calculator factor them in? I assume the amount I input should be theTOTAL of what I need to live on, PLUS my Federal and State taxpercentages that would be due on the yearly needed base amount if I am going to use the 72t money to pay the taxes due as well.
Would it be better to just use the 72t dollars to live on and pay the taxes due on the annual 72t payments from other non IRA money? (taxable accounts)
clear as mud ? 🙂
Thanks in advance2007-09-03 10:23, By: retired, IP: [69.133.11.60]

L2: tax and 72t calculatorMost people set up a SEPP 72-T because they do not have adequate funds outside of their retirement funds to live on. Some use SEPP 72-T because of special additional purchases or costs that they will be incurring before they are 59 1/2, and no other source of funds for that purpose. Usually people do not have outside funds to use to pay the taxes on their SEPP 72-T distributions, so they have to increase these distributions by 33 1/3% if they will be in the 25% tax bracket (or by 50% if they will be in the 35% tax bracket) in order to be left with the amount they will need after taxes. It is advisable to do specific tax planning to try to project your taxable income and tax brackets for the next 5 years, or to age 59 1/2 if later. Of course, if you are planning to retire in the year you will become 55, and separate from service from your employer, then you should consider the availability of withdrawals from your 401-k/403-b before setting up a SEPP 72-T. If you work for a government agency and are covered by a 457 plan, then you could retire even earlier. To the extent that you can pay the taxes on the SEPP 72-T from outside funds, you defer these income taxes, allolw these funds to continue to grow,and reduce any ultimate penalty if you have to bust the plan early.
I”m surprised at how many people think that they can get complex planning done without paying a qualified professional. Do yourself a favor and meet with a qualified tax or financial planning professional who is also knowledgeable about SEPP 72-T plans, but can develop alternative plans for you to consider.2007-09-03 11:06, By: dlzallestaxes, IP: [141.152.251.240]