Situation:

An executive recently retired from a large corporation. She is rolling over more than $1 million from her company retirement plan into an IRA account. She has very little in assets outside of the IRA and needs to start withdrawing money from the IRA as soon as possible. She is 56 years old, which is below the minimum distribution age of 59½ to withdraw assets penalty free.

Solution:

We can assist this executive by helping her get a clear picture of her financial situation including current assets, income and expenses. Part of this analysis is to project future expenses and available income, including Social Security. Many individuals don’t have a firm grasp of expenses when they first retire. We can use our years of experience working with retirees to helpdevelop a budget for this executive. We can also assist by helping determine how to pay her expenses. Since a majority of her investable assets are in an IRA and her assets outside the IRA are not enough to cover expenses for the next 3 ½ years, a solution was not readily apparent to her. We would discuss with her that since she is over the age of 55, she could take money out of her IRA, penalty free, in the form of a fixed annual withdrawal from the IRA over a 5-year period. This provision is called “substantially equal payments.” There are several methods to calculate the allowable amount that can be withdrawn. THOR can work closely with clients in determining which method would be best to not only cover current expenses, but ensure the investment assets last throughout a client’s lifetime. THOR’s active planning and investing can help clients enjoy retirement without the worry of outliving their investment assets.

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