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URL:  http://boards.fool.com/gene-thanks-for-this-reply-i-was-unaware-of-29457856.aspx

Subject:  Re: Use 401K as collateral? Date:  8/4/2011  5:49 PM
Author:  FoolishMiser Number:  272 of 294

Gene,

Thanks for this reply. I was unaware of RMD's. This is definitely something to include in the planning. Just a quick look at an online RMD calculator on the internet, it seems that a very low percentage of the 401K balance is required to be withdrawn, only around 3.6 percent in my hypothetical case.

For example, according to one calculator I found, if I had been born in 1945, and my 401K balance reaches $2M in 2015 (when I turn 70 1/2), I would be required to withdraw a minimum of $73K that year. Not that much.

But, as with everything else, when it comes to taxes, this factor could change in the future so it's something to keep in mind, as you suggest.

As for taking a loan by using the retirement account balance as collateral, and thereby reducing my tax rate (ordinary income tax rate), I am still looking into this scenario and would be interested if anyone knows anything about how to accomplish this.
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