U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 12-23-2009, 12:10 PM
 
23 posts, read 138,218 times
Reputation: 24

Advertisements

MadMan, how can I escape the 20% withholding? Are you saying that it has to be a Trustee to Trustee transfer, and not a Rollover?
Reply With Quote Quick reply to this message

 
Old 12-23-2009, 12:23 PM
 
8,204 posts, read 11,927,697 times
Reputation: 18020
Quote:
Originally Posted by AndyPettitteIsGreat View Post
MadMan, how can I escape the 20% withholding? Are you saying that it has to be a Trustee to Trustee transfer, and not a Rollover?
Don't get hung up on the terms. It is very simple: If the money is given to you (unless it is in a check made payable to the new trustee), then your old trustee will withhold the 20%. If they send it directly to the new trustee, they will not withhold any portion of it.
Reply With Quote Quick reply to this message
 
Old 12-23-2009, 01:02 PM
 
71,766 posts, read 71,875,234 times
Reputation: 49311
Quote:
Originally Posted by MadManofBethesda View Post
They don't.

There's also a way for someone who hasn't yet reached even the age of 55 to take distributions without penalty - and that is to take them from the 401(k) based on life expectancy under Rule 72(t). You can actually do that at any age, although obviously the younger you are, the more miniscule the payment.
yes 72t election lets you take it at any age but you have to withdraw it all over 72 months. you can do that from any ira at any age ... not the same as the allowable withdrawls at 55 at your own pace and desire that you can from a 401k if you retire early.

im to lazy to google it but if you withdraw at 55 from the 401k does it have to stay with the employer and not your own rollover even though your no longer employed by them ? i believe it does but im not 100% certain. do you know madman?
Reply With Quote Quick reply to this message
 
Old 12-23-2009, 01:58 PM
 
8,204 posts, read 11,927,697 times
Reputation: 18020
Quote:
Originally Posted by mathjak107 View Post
yes 72t election lets you take it at any age but you have to withdraw it all over 72 months. you can do that from any ira at any age ... not the same as the allowable withdrawls at 55 at your own pace and desire that you can from a 401k if you retire early.
No, that is incorrect. The withdrawal is based on your life expectancy. So if you were in your early 50s for example, the sum that first year would be approximately 3%. You couldn't take it all out penalty-free over 72 months even if you wanted to.

Quote:
Originally Posted by mathjak107 View Post
im to lazy to google it but if you withdraw at 55 from the 401k does it have to stay with the employer and not your own rollover even though your no longer employed by them ? i believe it does but im not 100% certain. do you know madman?
I'm too lazy as well. But I am pretty certain that it has to remain with your employer. If you roll it over into an IRA, then it becomes subject to IRA rules (59 1/2).
Reply With Quote Quick reply to this message
 
Old 12-23-2009, 02:07 PM
 
71,766 posts, read 71,875,234 times
Reputation: 49311
To take a 72t election of "substantially equal periodic payments" (SEPP) from your IRA without penalty, you must withdraw money at least once a year, and you must keep taking withdrawals for five years or until you reach age 59, whichever is longer. So, a 35-year-old must take withdrawals for twenty-five years, while a 51-year-old must take them for eight-and-a-half years. A 57-year-old would have to take withdrawals for five years, until age 62. Also, you must let a minimum of 5 years plus 1 day elapse from the date of your first SEPP withdrawal before making "unlimited" withdrawals from your IRA, even if you've reached age 59 1/2. Otherwise, the IRS will hit you with the 10% penalty and retroactive interest charges.

The amount of your withdrawal is calculated based on the balance of your retirement account on December 31 of the preceding year or any date in the current year prior to the first distribution using your age on December 31st of the year in which you make the withdrawal.

so bottom line is its not over 5 years as i thought and its not over life expectancy as you thought... tie score!

Last edited by mathjak107; 12-23-2009 at 02:20 PM..
Reply With Quote Quick reply to this message
 
Old 12-23-2009, 02:27 PM
 
8,204 posts, read 11,927,697 times
Reputation: 18020
Quote:
Originally Posted by mathjak107 View Post
by using an IRC Sec. 72(t) election, IRA money can be taken at any age provided substantially equal payments are taken for the longer of five years or until age 59 is reached.
its not based on your expedited life expectancy..

okay now we are even for when ya got me lol.
Nope, sorry. You've interpreted that wrong.

What that section is saying is that you can take equal payments without penalty AS LONG AS you take them for a MINIMUM of five years or until age 59 1/2. BUT the payments are still based on your life expectancy.

So in my example above, the early 50s individual can start receiving payments without penalty at approximately 3%/year and he must continue to do so for 5 years or until he is 59 1/2 (whichever is later) or he will be hit with the 10% penalty on ALL prior withdrawals. After the age requirement or 5-year period has been met, he can then cease the equal payments and make any changes/withdrawals he wants.

Feel free to conduct further research. (But it will be to no avail )

Sorry, but now you're oh for two.
Reply With Quote Quick reply to this message
 
Old 12-23-2009, 04:56 PM
 
71,766 posts, read 71,875,234 times
Reputation: 49311
so then the ira dosnt have to be totaly cleaned out by 59-1/2? interesting.... looks like you have 3 ways to figure it to.

http://www.required-minimum-distribu...ributions.html

Last edited by mathjak107; 12-23-2009 at 05:04 PM..
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top