In this episode of 'Retire with Style', hosts Alex Murguia and Wade Pfau with Jessica Wunder from McLean Asset Management delve into the complexities of early withdrawals from retirement accounts, specifically IRAs and 401(k)s. They discuss the penalties associated with early withdrawals, the Rule of 55, and various exceptions allowing penalty-free access to funds. The conversation highlights the differences between IRAs and 401(k)s, including specific exceptions applicable to each type of account. In this conversation, the speakers discuss the new exceptions introduced by Secure Act 2.0, including emergency withdrawals and disaster recovery relief. They delve into various early withdrawal exceptions, such as those for death, disability, and medical expenses. A significant focus is placed on the 72T approach, which allows for early withdrawals without penalties under specific conditions.

Takeaways

• The Rule of 55 allows penalty-free withdrawals from 401(k)s after age 55.
• Public safety employees have unique exceptions for early withdrawals.
• You can withdraw for medical insurance premiums if unemployed.
• Educational expenses can be covered by early withdrawals from IRAs.
• The 72(t) strategy allows for substantially equal periodic payments.
• There are strict rules governing early withdrawals from retirement accounts.
• Early withdrawal exceptions include death, disability, and medical expenses.
• The 72T approach allows for substantially equal payments from retirement accounts.

Chapters

00:00 Introduction and Guest Introduction 01:38 Understanding Early Withdrawals from Retirement Accounts 04:02 Exploring the Rule of 55 11:09 Exceptions for IRAs vs. 401(k)s 15:57 Common Exceptions for Early Withdrawals 18:00 New Exceptions in Secure Act 2.0 22:00 Understanding Early Withdrawal Exceptions 30:00 The 72T Approach Explained 35:59 Planning for Retirement Cash Flow Needs

Links

Click here to download Retirement Researcher’s free resource, “Exception to Early Withdrawal Penalties“: https://retirement-researcher.ontralink.com/tl/476

We’re hosting another YouTube LIVE Q&A episode for RWS! Click here to submit your questions: www.retirementresearcher.com/ask

Watch this episode on YouTube: https://youtu.be/EzdIgudCkPQ?feature=shared

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode of 'Retire with Style', Wade and Alex discuss the complexities of pension decisions with Jason Rizkallah from McLean Asset Management. The conversation delves into the critical choices retirees face regarding pension options, including whether to take a lump sum or annuity payment, the implications of each choice, the importance of comprehensive financial planning, and the potential benefits of external annuities. They discuss the importance of evaluating commercial annuities, understanding the structures and benefits of different annuity options, and the credit risks associated with pensions and insurance companies. The conversation also covers strategies for diversification, the significance of rate lock procedures, and the impact of income decisions on overall retirement planning. Listen now to learn more!

Takeaways

• Annuities provide reliable income but come with liquidity issues.
• Tax implications are significant when taking a lump sum.
• External annuities can be competitive with pension options.
• Comprehensive financial planning is essential for retirement success.
• The choice between lump sum and annuity should consider long-term goals.
• Market conditions can affect the competitiveness of annuities. Consider all options before deciding on a pension or lump sum.
• Commercial annuities may offer better income rates than pensions.
• Evaluate the structure of annuities for survivor benefits.
• Credit risk varies between pensions and insurance companies.
• Diversifying annuities can mitigate risk but may lower income.
• Rate lock procedures are crucial in securing favorable annuity rates.
• Understand the implications of income on Medicare premiums.
• Ask providers about the potential repercussions of retirement choices.
• Partial rollovers may be possible but are often all or nothing.

Chapters

00:00 Introduction to Pension Decisions 02:35 Understanding Pension Options: Lump Sum vs. Annuity 05:54 Exploring the Third Option: External Annuities 08:51 Pros and Cons of Taking a Lump Sum 16:17 Evaluating Annuity Options 25:49 The Case for External Annuities 27:23 Evaluating Pension vs. Lump Sum Options 30:53 Understanding Annuity Structures and Benefits 34:34 Assessing Credit Risks in Pensions and Annuities 38:18 Exploring Partial Rollovers and Diversification Strategies 42:09 Navigating Rate Lock Procedures for Annuities 47:11 Considering the Impact of Income on Retirement Planning

Links

Click here to download Retirement Researcher's free flowchart resource, "Should I take my pension as a lump sum?": https://retirement-researcher.ontralink.com/tl/474

We’re hosting another YouTube LIVE Q&A episode for RWS! Click here to submit your questions: www.retirementresearcher.com/ask

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

In this episode of 'Retire with Style', Wade and Alex delve into various aspects of tax planning, focusing on strategies such as front-loading taxes, tax loss harvesting, and deduction bunching. They discuss the implications of tax filing status changes, particularly for surviving spouses, and the impact of the Secure Act on inherited IRAs. The conversation emphasizes the importance of strategic Roth conversions and planning for future tax rates, providing listeners with valuable insights into effective tax management in retirement. The discussion also highlights the potential benefits of front-loading taxes and the implications of the SECURE Act on retirement accounts. Listen now to learn more!

Takeaways

• Front loading taxes can increase after-tax wealth.
• Inherited IRAs have new tax implications post-Secure Act.
• Roth conversions can be beneficial for beneficiaries.
• Tax planning should consider future income levels.
• Understanding tax liabilities is crucial for inheritance planning. Consider front-loading taxes to take advantage of current rates.
• Tax loss harvesting can add value to portfolio management.
• Deduction bunching can maximize tax benefits from charitable contributions.
• Donor advised funds offer flexibility in charitable giving.
• Appreciated shares can be donated to avoid capital gains taxes.
• Increasing after-tax spending power is a key goal in tax strategy.

Chapters

00:00 Introduction to Tax Planning Conversations 05:12 Reasons to Front Load Taxes 08:01 Implications of Filing Status Changes 10:28 Embedded Tax Liabilities in Inheritance 12:39 Strategic Roth Conversions for Beneficiaries 14:51 Planning for Future Tax Rates 18:11 Tax Strategies for Retirement Planning 32:10 Maximizing Charitable Contributions 43:34 Future Tax Planning and Legacy Considerations

Links

The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/

This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips