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My wife and I are considering a 1-3 year vacation from life as we know it (NOT drug induced!:). We are both 46 and are planning the first hiatus at about age 50. We are considering partially funding this (and hopefully other) adventures prior to "full-time retirement" by using IRS reg 72-T to draw from our tax-deferred accounts.

I'm looking for real life experiences with this type of distribution. Additionally, I'd like to hear from those of you who have been aggressive with this technique (i.e., interest rates used, annuity or mortgage method, etc.)

I'm also assuming that, even though I'm withdrawing money until I'm at least age 60, I can partially offset taxes by making contributions to a tax-qualified plan as I work in between excursions.

Thanks in advance for your comments!
Gary

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Hi gdc45,

You might want to post your question on the following
board

http://boards.fool.com/Messages.asp?id=1380025000081003&sort=postdate

It's the Early Retirement Board. The majority of the posters have either retired early or are in the process of doing so.

Hope this helps,

Helen
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§72(t)(2)(A)(iv) governs SEPP's (Substantially equal periodic payments) and is one of the trickier code sections in that little is provided to the average taxpayer on the surface. IMHO, you should hire a professional specifically versed in this area and pay a couple of hundred to get a plan built correctly as well as an opinion from that professional to protect yourself. This is even more true if you anticipate being aggressive; aggressive being anything greater than 8% of total deferred assets taking into consideration your current ages.

TheBadger
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For one possible result of being "aggressive" with your SEPP withdrawals, see post #520 on the Retire Early Home Page Board.

http://boards.fool.com/Message.asp?id=1380025000083007&sort=postdate

intercst
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Thanks for the track to the Early Retirement Board, gang! I'll be doing some serious research there, but I'll check back at this post for your thoughts.
Regards,
Gary
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The actual language of the rule states the interest should "not exceed a reasonable rate". However, Private Letter Rulings indicate that the IRS thinks the interest rate should be within a reasonable interest rate. The Rulings further indicate that the IRS takes a rather conservative view of reasonable, within 80%-120% of the Mid-Term Treasury rate at the time of first withdrawal (5-7%).

Both the Wise & the Fools would argue this rate is ridiculously low. However, you have to make your own decision taking your chances at an audit.
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