Tuesday, July 21, 2015

My Poland Relocation: Taxes & Withdrawals

Looked at taxes and withdrawals again this morning. Based on my research (mostly this Money Mustache post and its comments: http://www.mrmoneymustache.com/2011/11/1...your-401k/ ), my withdrawal plan is:

1) 72(t) Substantially Equal Periodic Payments (SEPP) using the Required Minimum Distribution (RMD) Method - there are three methods the IRS allows for you to avoid the early withdrawal penalty, but I chose the RMD method, since it's the only one whose annual dollar amount is allowed to change (it must track your retirement account value, so in my mind it actually tracks inflation). With SEPP you only pay income taxes at the rate you're under when you withdraw (no early withdrawal penalties or capital gains taxes). IRS Source: http://www.irs.gov/Retirement-Plans/Reti...Payments#7

2) Taxable accounts - no early withdrawal penalties, just capital gains taxes. Already paid income taxes at my working rate here though Sad

3) Start Money Mustache's "Roth IRA Escape Hatch Loophole" in 2016, when I'm in a lower tax bracket, since I worked for the first half of 2015. That way, in 2021 (2016+5) I'll start to be able to get my 401k principal (not the gains) free of penalties and capital gains taxes (but not income taxes)

4) Traditional 401k / Roth 401k / Roth IRA withdrawals at 59.5+ (assuming the gov't doesn't push this back)

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