22 June 2007

72(t) SEPP withdrawals for early retirement

In my neverending quest to find the best way to save for retirement, I've given some consideration to the 72(t) SEPP (substantially equal periodic payments) provision that applies to IRAs.

Basically it works like this. The 10% early withdrawal penalty can be waived, at any age, if you start taking substantially equal periodic payments designed to last the rest of your life. These SEPPs have guidelines set by the IRS, and you must be careful when you get one set up to assure that you don't get penalized for not following the guidelines.

Here's the cool part-- when you hit 59 1/2 or have been taking SEPPs for 5 years (whichever is LATER), you can stop taking SEPPs and withdraw the money at your discretion without penalty. So you can use SEPPs to help fund your early retirement, then when you hit 59 1/2 you can alter your plan to withdraw based on your needs instead of a formula. This enables you to fund both your standard retirement and any early retirement period entirely within the confines of an IRA-- giving you the tax benefits and still allowing you to take funds out before "retirement age."

How much are these SEPPs going to give you? Great American Financial Resources, Inc. has a nice calculator that will give you some idea of what one of these looks like. They also outline the rules, in layman's terms, for setting one up.

This changes the game a little bit. You now have a considerable number of options to fund early retirement: withdrawing Roth contributions, building up taxable assets and just paying capital gains taxes, or building an IRA and rolling your 401k assets into it, then setting up SEPPs. Depending on the size of your SEPPs, you may need to do more than one of these. Then when you hit 59 1/2, all these assets are fair game! Access them at your leisure, only paying applicable taxes and taking no fee hits.

My mind has been a roller coaster ride over all this research . . I've crunched way too many numbers and read way too many articles. But with the 72(t) SEPP option, I think the picture is becoming a little more clear. The best part is that conventional advice-- maxing your IRAs and 401ks-- remains applicable even if you plan to retire early. This is NICE, as it makes saving considerably less complicated.

Now that everything seems totally clear, I expect to read something in the next few weeks that confuses the issue further. But hey, early retirement wouldn't be nearly as fun as a goal if it were a stationary target. :-)

223 comments:

«Oldest   ‹Older   201 – 223 of 223
Anonymous said...

I'm not sure exactly why but this web site is loading extremely slow for me. Is anyone else having this problem or is it a problem on my end? I'll check back later
on and see if the problem still exists.

My web blog - work from home

Anonymous said...

I've read some good stuff here. Certainly price bookmarking for revisiting. I surprise how so much effort you put to make one of these fantastic informative site.

Here is my site binary options brokers

Anonymous said...

My brother suggested I would possibly like this web site.
He was once totally right. This put up truly made my day.
You cann't consider just how a lot time I had spent for this info! Thank you!

my blog ... how to trade binary options

Anonymous said...

I was very pleased to uncover this web site.

I want to to thank you for your time for this wonderful read!

! I definitely savored every bit of it and I have you book marked to look at
new things on your website.

my web page ... best broker for penny stocks

Anonymous said...

Very good post. I absolutely appreciate this site.
Keep it up!

Take a look at my web blog :: http://www.youtube.com/watch?v=jLuC1nG5cPk

Anonymous said...

Thank you a bunch for sharing this with all people
you actually know what you are talking about!
Bookmarked. Please additionally discuss with my site =).
We may have a hyperlink exchange agreement between us

Have a look at my web site http://www.youtube.com/watch?v=fCkK9-pzu_o

Anonymous said...

This is the perfect site for everyone who hopes to find out about this topic.
You realize a whole lot its almost tough to argue with you (not
that I personally would want to…HaHa). You certainly put a brand new spin on a subject that has been discussed
for ages. Wonderful stuff, just wonderful!


Feel free to surf to my blog; http://www.youtube.com/watch?v=pwex99npRdc

Anonymous said...

Thank you for another fantastic post. The place else may just anybody get that type of info in such a perfect method of writing?
I've a presentation subsequent week, and I am at the look for such info.

Also visit my site - http://www.youtube.com/watch?v=Al2XPf2DgwE

Anonymous said...

Hello, I think your site might be having
browser compatibility issues. When I look at your blog in Firefox, it looks fine
but when opening in Internet Explorer, it has
some overlapping. I just wanted to give you
a quick heads up! Other then that, terrific blog!


Feel free to visit my homepage :: ways to make money fast

Anonymous said...

bookmarked!!, I really like your site!

My web site: http://www.youtube.com/watch?v=fCkK9-pzu_o

Anonymous said...

Hi, i think that i saw you visited my website thus i came to “return the favor”.

I'm attempting to find things to enhance my web site!I suppose its ok to use a few of your ideas!!

Here is my weblog :: how to make extra money from home

Anonymous said...

Pretty! This was an incredibly wonderful article. Many thanks for supplying this info.


Also visit my website :: http://www.youtube.com/watch?v=gtCm82Itxoc

Anonymous said...

This site truly has all of the information I needed concerning this subject and didn't know who to ask.

Also visit my weblog binary options brokers

Anonymous said...

I know this site gives quality depending articles or reviews and other data, is there any other site which gives these things in quality?


Also visit my web-site; Make real money online

Jeff said...

LOL at the spam.... Nice article about 72t. I've been researching also. Hoping to retire at 50-52 ish. Shooting for 1-2 million in my 401k.

Anonymous said...

I knоw this wеb page prеsents qualіtу basеd posts and additional infoгmаtion, is theгe
аny otheг webѕite which presents
thеse data in quаlіty?
raspberry ketone scam - Raspberry ketone scam - raspberry ketone scam

my blog raspberry ketone side effects

Anonymous said...

Hі! This post couldn't be written any better! Reading this post reminds me of my previous room mate! He always kept chatting about this. I will forward this write-up to him. Pretty sure he will have a good read. Thank you for sharing! Raspberry ketone plus gnc - raspberry ketone side effects - where to buy raspberry Ketone Drops

Also visit my web blog raspberry ketone side effects

Anonymous said...

Wow! At last I got a web site from where I be capable of truly get
valuable data regarding my study and knowledge.

Look at my website :: Psn Code Generator

Anonymous said...

I know this site provides quality depending articles and additional information, is there any other web site which
gives these kinds of data in quality?

Feel free to surf to my web-site; candy crush saga hack

Anonymous said...

I know this web page presents quality depending articles or reviews and extra information, is there any other website which provides these information in quality?


Also visit my web page - Generateur de Code PSN

Anonymous said...

Do you have a spam issue on this blog; I also am a blogger,
and I was curious about your situation; we have created some nice procedures and we are looking to swap solutions with others, please shoot me an
email if interested.

Here is my web page :: Psn Code Generator - -

Anonymous said...


http://bit.ly/11E6sdj Death can also covered by some policies up to a set age but you should check with your provider as not all include this cover. Also check if you have a cross-breed with this type of dog as you may find the insurance will not cover you for this either.

Nadia younis said...

Good blog post. I absolutely appreciate this site.
Keep it up!

Here is my website: http://www.toprecruitmentservices.co.uk/

«Oldest ‹Older   201 – 223 of 223   Newer› Newest»