OT: Early Retirement by Tapping IRA

[aldante]

At 40 the rule is not just a 10% penalty it is actually ordinary income plus 10% penalty. The penalty is based on the income not the after tax income. So 60k withdrawal (5% of $1,200,000)from an ira x 15% = $9,000 paid in ordinary taxes. Then one must take $60,000 x 10% = $6,000. $9,000 plus $6,000 = $15,000 tax on a $60,000 distribution leaving you with

Walaa : $45,000. (It is only that much if you are in the %15% bracket) So what that means is a your 5% distribution only gets you purchasing power of 3.75%.

Of course that deplets your ira by 60k so by age 41 your IRA is only worth $1,140,000 (assuming you do not make or lose any in the market)
The only way to avoid the 10% penalty on an ongoing basis is if you take a 72t distribution which figures your life expectency and gives you a yearly payment. If you try and stop that payment before age 59.5 you are subject to a 50% tax.

Based on those numbers my plan would be to stop working and have your wife work.

[scaredyclassic]

I think on the bible it’s said that man is meant to scratch a living by the sweat of his brow. Perhpas we are not meant to kick back and relax.

[scaredyclassic]

I think on the bible it’s said that man is meant to scratch a living by the sweat of his brow. Perhpas we are not meant to kick back and relax.

[scaredyclassic]

I think on the bible it’s said that man is meant to scratch a living by the sweat of his brow. Perhpas we are not meant to kick back and relax.

[scaredyclassic]

I think on the bible it’s said that man is meant to scratch a living by the sweat of his brow. Perhpas we are not meant to kick back and relax.

[scaredyclassic]

I think on the bible it’s said that man is meant to scratch a living by the sweat of his brow. Perhpas we are not meant to kick back and relax.

[joec]

Yeah, I think as other posters have said, medical and things like long term care (NOT COVERED unless you are DEAD broke in CA meaning you have less than 2k I think on you as a single person) is a big wild card in the US.

As cvmom mentioned as well, finding work again after you’re out for a while and 40+ is incredibly hard I think with all the new programmers and simply “cheaper” resources.

Best of luck. I’d suggest a sabbatical if your company offers to let you do that without pay.

[joec]

Yeah, I think as other posters have said, medical and things like long term care (NOT COVERED unless you are DEAD broke in CA meaning you have less than 2k I think on you as a single person) is a big wild card in the US.

As cvmom mentioned as well, finding work again after you’re out for a while and 40+ is incredibly hard I think with all the new programmers and simply “cheaper” resources.

Best of luck. I’d suggest a sabbatical if your company offers to let you do that without pay.

[joec]

Yeah, I think as other posters have said, medical and things like long term care (NOT COVERED unless you are DEAD broke in CA meaning you have less than 2k I think on you as a single person) is a big wild card in the US.

As cvmom mentioned as well, finding work again after you’re out for a while and 40+ is incredibly hard I think with all the new programmers and simply “cheaper” resources.

Best of luck. I’d suggest a sabbatical if your company offers to let you do that without pay.

[joec]

Yeah, I think as other posters have said, medical and things like long term care (NOT COVERED unless you are DEAD broke in CA meaning you have less than 2k I think on you as a single person) is a big wild card in the US.

As cvmom mentioned as well, finding work again after you’re out for a while and 40+ is incredibly hard I think with all the new programmers and simply “cheaper” resources.

Best of luck. I’d suggest a sabbatical if your company offers to let you do that without pay.

[joec]

Yeah, I think as other posters have said, medical and things like long term care (NOT COVERED unless you are DEAD broke in CA meaning you have less than 2k I think on you as a single person) is a big wild card in the US.

As cvmom mentioned as well, finding work again after you’re out for a while and 40+ is incredibly hard I think with all the new programmers and simply “cheaper” resources.

Best of luck. I’d suggest a sabbatical if your company offers to let you do that without pay.

[enron_by_the_sea]

I agree with other posters that one should work as long as one can.

However, my understanding is that you do not have to pay 10% penalty for withdrawing from your IRA before qualifying age if you set up something called “substantially equal periodic payments” (SEPP) based on your life expectancy.

That will still count as income on which you need to pay tax on…

[enron_by_the_sea]

I agree with other posters that one should work as long as one can.

However, my understanding is that you do not have to pay 10% penalty for withdrawing from your IRA before qualifying age if you set up something called “substantially equal periodic payments” (SEPP) based on your life expectancy.

That will still count as income on which you need to pay tax on…

[enron_by_the_sea]

I agree with other posters that one should work as long as one can.

However, my understanding is that you do not have to pay 10% penalty for withdrawing from your IRA before qualifying age if you set up something called “substantially equal periodic payments” (SEPP) based on your life expectancy.

That will still count as income on which you need to pay tax on…

[enron_by_the_sea]

I agree with other posters that one should work as long as one can.

However, my understanding is that you do not have to pay 10% penalty for withdrawing from your IRA before qualifying age if you set up something called “substantially equal periodic payments” (SEPP) based on your life expectancy.

That will still count as income on which you need to pay tax on…

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