You are 49 and retired. Your wife will/might retire at the end of 2026. You want to know where to find spending money from 49 to 59.5.
1. The SEPP is one answer. If you do that, it will continue for the full 10ish years until you are 59.5. It cannot be shorter. If you go this route, you would roll part of His 401k into an IRA and do the SEPP on that IRA. No money other than your SEPP payments would go into or come out of that IRA. If you take out too much or too little or accidentally add any money to the IRA prior to 59.5, that will "bust" the SEPP and be costly in terms of penalties.
There are ways to determine how much money to put into the IRA you want to SEPP. I don't know them myself.
2. You could live on your taxable account and/or Roth accounts for quite awhile. You have $1.26 million in taxable and $840k in Roth if I did the math correctly. That could last near 10 years. I don't think that doing this alone is a good choice, but doing some of this might be a good choice.
3. If you lived on taxable and/or Roth for 5 years, you could start a Roth conversion ladder. Each year you would convert $200k ish from pre-tax to Roth. 5 years later, that contribution is available to live on without penalty. When you reach 59.5, all the money is available without penalty. You would need to do some good record keeping for this - there is an order to how money comes out of your Roth IRA.
I suspect the best approach is a combination of the above.
A couple of things were not clear to me. You estimated spending $200k ish. Did that include income taxes? If that does not include state and federal taxes, your expenses are much higher than you think.
With an income of $200k, I believe the ACA might be pretty expensive. Have you actually looked into that yet?
1. The SEPP is one answer. If you do that, it will continue for the full 10ish years until you are 59.5. It cannot be shorter. If you go this route, you would roll part of His 401k into an IRA and do the SEPP on that IRA. No money other than your SEPP payments would go into or come out of that IRA. If you take out too much or too little or accidentally add any money to the IRA prior to 59.5, that will "bust" the SEPP and be costly in terms of penalties.
There are ways to determine how much money to put into the IRA you want to SEPP. I don't know them myself.
I don't know what this means. $400k is not nearly enough to do a SEPP for 10 years to cover the expenses you mention.For my 401k’s I think it makes sense to SEPP the smaller account: roughly $400k.
2. You could live on your taxable account and/or Roth accounts for quite awhile. You have $1.26 million in taxable and $840k in Roth if I did the math correctly. That could last near 10 years. I don't think that doing this alone is a good choice, but doing some of this might be a good choice.
3. If you lived on taxable and/or Roth for 5 years, you could start a Roth conversion ladder. Each year you would convert $200k ish from pre-tax to Roth. 5 years later, that contribution is available to live on without penalty. When you reach 59.5, all the money is available without penalty. You would need to do some good record keeping for this - there is an order to how money comes out of your Roth IRA.
I suspect the best approach is a combination of the above.
A couple of things were not clear to me. You estimated spending $200k ish. Did that include income taxes? If that does not include state and federal taxes, your expenses are much higher than you think.
With an income of $200k, I believe the ACA might be pretty expensive. Have you actually looked into that yet?
Statistics: Posted by retiredjg — Sat Sep 27, 2025 3:03 pm — Replies 20 — Views 1639