Personal Finance (Not Investing) • Retirement: From where to pull and in what order?

Would love for BH folks to opine on the question "From where to pull and in what order?" for an example couple, each aged 50 (one not working, the other wants to stop sometime in 2025).

Round example numbers for ease:

• Taxable Brokerage: $6M, cost basis $3M

• Roth IRA: $1M

• 401k: $2M

• Traditional IRA (tIRA): $15M

• One working spouse income until retiring in 2025(tbd): $400K

• Annual desired post-tax expenses including ACA Insurance when both retired: $400K

• (529's are already fully funded)

How would one advise this couple "from where and in what order" to meet their theoretical desired annual expenses, while also avoiding significant tIRA RMD issues in the future?

Considerations:

• Pulling solely from taxable first as a rule, until $6M fully depleted?

• Pulling from Roth, either solely or in tandem/supplemental?

• Pulling some or most from tIRA for Roth conversion and living expenses? And since the tIRA is outsized, would simply pulling first from tIRA via SEPP/72t, OR simply withdrawing and paying the 10% penalty till 59.5, leaving taxable and Roth alone, even be a sensible consideration given the tIRA relative size?

• Upon retiring, should 401K be converted to tIRA, and then eventually converted to Roth, or leave it alone?

Fundamentally, what advice would you have for this couple till 59.5, and after 59.5?

TIA!

Statistics: Posted by airahcaz — Wed Dec 18, 2024 9:39 am — Replies 5 — Views 262

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