But first a note on tax deferred accounts in general.You can debate the merits of Roth versus traditional IRAs and 401ks all you want, but know that we saved well over a hundred thousand dollars in taxes by maxing out tax deferred options.It requires a long term commitment to a rigid withdrawal scheme with severe penalties for messing up withdrawals. It’s the plan I’m following to fund the next twenty five years of my early retirement before reaching age 59.5.In other words, it’s very difficult to deviate from the 72t withdrawal plan before reaching age 59.5, and if you do so by accident, you’ll feel the snap of the trap and lose ten percent of your withdrawals backdated to your very first 72t withdrawal (ouch! By cleverly maxing out our tax deferred savings options, we owed almost nothing in taxes every year in spite of our combined (very very low) six figure income.Convert another ,000 in 2016, pay the tax (if any), then you have ,000 to withdraw in 2021.Convert another ,000 in 2017, pay the tax (if any), then you have ,000 to withdraw in 2022.But let me tell you, you’re so screwed because you have to pay a 10% penalty on top of ordinary income tax on every penny you withdraw now because you are in your thirties and nowhere near age 59.5.
The second catch is that you have to pay taxes at the time of conversion. Let’s say you convert ,000 from your traditional IRA to a Roth IRA during 2015.
Your portfolio might never walk again, and at the least it’ll need crutches or other assistance to carry you through retirement. Here’s one the most frequently asked questions I receive: Hey dude, I read your awesome article on earning 0,000 per year while paying only 0 in tax.
You put over ,000 into traditional 401ks and IRAs by maxing out those accounts each year.
When left with no other alternative but to pass through a choke point like an alleyway between adobe mud compounds, the soldier sweeps the ground with a metal detector to check for IEDs.
Feet and legs are important, and the utmost precautions are taken to prevent loss of life and limb.