by Joe
on September 17, 2008
If that’s not an eye catching title of a blog post, I don’t know what would be!
A reader writes, “Joe, I’ve read all the books on finance, have saved a large chunk of my income and lived like the “Millionaire Next Door” long before the book of that title was published. Now, in my late 40’s I’m eying early retirement, but much of my savings is pretax, in IRA accounts, both from deposits and rolled over from 401(k) accounts. Is there any way to get some money out without a 10% penalty?” – Stephan T.
Well, first, Stephan, thanks for writing. I am always trying to solicit questions and ideas for future posts.
Now, to your question. The IRS does offer you an out. It’s called Section 72(t) after the portion of the tax code that addresses this issue. You are permitted to take withdrawals from your IRA which follow a “series of substantially equal periodic payments (SOSEPP)”. Once you begin this process, you must continue this exact withdrawal amount for 5 years or until age 59-1/2, whichever comes later. So for others who are approaching age 59-1/2, they may be best off avoiding this option, but for you it may be perfect. The choices for calculating that periodic payment are minimum distribution, amortization, and annuitization. I recommend the book titled “A Practical Guide To Substantially Equal Periodic Payments And Internal Revenue Code 72(t)” if you are serious about implementing this plan and are not clear from the IRS site.
Joe
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by Joe
on September 16, 2008
There is a little known provision in the social security rules that allow you to return all the payments you have received so far in return for a recalculated new monthly benefit. The money you’d need to return does not include any interest, so if you are 70 years old and had started collecting social security at age 62, you are returning those funds with cheaper dollars. Also, if you had been taxed on any portion of those prior benefits, you may claim the tax as a credit in the year you pay back the accrued payments. After you reimburse the SS office, you reapply for your new benefit. See “Request for withdrawal of application” at IRS.gov or contact your local social security administration office for more details.
For another bloggers advice see Increase Social Security Benefits by The Military Wallet.
Joe
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by Joe
on September 14, 2008
When I first heard about the website del.icio.us (yes, it was a clever domain name with ‘icio’ as the registered name within the top level .us) I looked a bit, and it seemed interesting, a way to track my bookmarks independent of what computer I’m on. But, until I started my blog, I didn’t think I’d use the site on a regular basis. Now that I rediscovered Delicious (they got the domain delicious.com registered now) and found it would be a convenient way to share other sites I find interesting without the need to do a separate post or continue to add to a blogroll.
I have added two menu boxes; to the left one tracking links to sites relevant to the 2008 election, including a link to the latest Rasmussen Poll data. To the right, I added access to the latest links of financial articles I’ve recently enjoyed.
Joe
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by Joe
on September 13, 2008
A week or so ago, CNBC had a discussion with Donny Deutsch who hosts The Big Idea. He offers Palin, the brand and sees her as:
which just struck me as a bit surrealistic. Palin as a breakfast cereal. This post does not reflect any opinion regarding either set of candidates. I have not yet come to a conclusion beyond “300 million people and these are the best 4 for the job?”.
Enjoy the weekend.
Joe
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by Joe
on September 12, 2008
CNNMoney had an interesting look at how Obama and McCain would change your taxes in an article titled “what they’ll do to your tax bill“. This article is a few months old, a more recent update is available from the Tax Policy Center, and is as recent as Aug 28. A look at either article shows that both candidates wish to lower taxes overall, but it’s clear that McCain would skew the savings toward the top earners, the 1%. I don’t wish to ‘soak the rich’, but you can see that there’s probably some reasonable medium. Obama wants to raise taxes on those making over $250K, and McCain would give the highest decreases to those same earners. I don’t like either candidates proposal. I say freeze the rates on the top 1%, no change, help those who really are hurting, and invest in the country’s future.
Joe
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