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Messages - CEM

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Thank you for the reply.  I suspected as much, but appreciate hearing it from you.

I recently heard that the 72(t) calculations for SEPP are not longer limited to 120% of the Federal mid-term rates, but can go up to 5% (more info here  Would there still be an advantage to Roth conversions if the SEPP calculation ended up being around the Roth conversion amount?

Is there anything to consider from an optimization standpoint (traditional IRA amount and age for instance to determine which is better).

Thank you.

Thanks for breaking it down so nicely (as you often do!).

Thanks for the reply and clarifying how the 4% rule applies. 

I am still unsure what to do about having a majority of the retirement funds locked up in 401k funds.  I would rather not do the 72t for the reasons you mentioned.  I am also currently hovering around the 22-24% tax bracket edge so converting 401k to Roth IRA now may not be the best move tax wise (although while I find your tax free lifestyle awesome, I am willing to pay a bit if needed, just not with my current salary). 

Should I start the Roth conversion ladder and just pay the higher taxes, or work a few more years and build up the personal accounts (then start converting yearly with presumably less of a tax burden)?

I have started to really look into this whole FIRE thing and it seems like I could be closer than I originally thought.  Problem is all these years of maxing out my 401ks (had a few different jobs in the last decade) and my Roth IRA, I was just letting the rest of my money go to my checking account like a chump. 

I recently got on the Vanguard train (just in time to take a hit from the CoronaVirus news, but I'm not scared!) to get that checking account money to do some work. 

I am in my mid 30's and I know there are rollover options to get the 401k money early, but should I just look at all my investments as one giant pool of retirement money when calculating how much I need to retire (4% rule)?  Or should I wait to get more liquid funds?

Some rough numbers to maybe help make more sense:

401k: $449k
Roth:  $48k
Vanguard: $75k

Some FIRE calculators are showing I could retire within 5 years living off 25-30k (which I am sure I can do, have made some lifestyle changes and I was pretty close to that before I made these changes), but not sure how I could with the investments like this.  Am I over thinking this?  I have this (possibly irrational) fear (hey, it's a big step!) that I'd run out of Roth and Vanguard money before any 401k rollovers completed to avoid penalties.

To put it another way, does the 4% rule care about how my retirement money is split up between 401k/roth/personal?

Thank you in advance!

Thanks Brandon!  I think that sums it up quite nicely!

Makes perfect sense.  Thank you.  I was thinking this would be spreading yourself too thin (ie, having too many cards and not generating enough points for each individual one) but it sounds like that system works just fine!  Appreciate the reply.

I can understand how to pick a card for travel based on sign-up bonuses, but with all these cards how do you determine which ones to use for everyday purchases?  For instance, does it make sense to have a "grocery card", a "restaurant card" and an "point on all purchases" card?  It seems like with so many cards it would take a while to gain enough points on them (aside from the sign-up bonus).  I have just one card for hotel points, spend a fair amount monthly and barely get to the numbers I've seen in your blogs (it's possible my card is just terrible). 

Is there an optimal way you use to determine which card you use for everyday use? 

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