Author Topic: Deciding Between SEPP and Roth Ladder?  (Read 2582 times)


  • Stubble
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Deciding Between SEPP and Roth Ladder?
« on: July 24, 2014, 11:38:27 AM »
What factors should one consider when deciding between SEPP and a Roth Ladder/Pipeline for accessing tax advantaged accounts during early retirement years?

Thus far, all I have seen is that SEPP is more rigid and a Roth Ladder is more flexible but takes more effort (requiring more upfront money to be available and requiring regular movement of funds to keep the pipeline full). It also feels like a SEPP-based approach is more insulated from future changes in tax laws, though I'm not sure how much of an emphasis to place on this.

Let me follow that with a specific question: does starting to take SEPP mean that you can never perform any kind of roll-over or otherwise touch the money from the account (until you are 59.5 and 5 years has passed since starting SEPP)? Or is there still some amount of rollover available?

Finally, if you have multiple accounts (from multiple jobs) that have not been combined together, would it ever make sense to do a split approach and take SEPP from one account while using a Roth Ladder in the other account to fund the rest of your needs? This would theoretically lower the amount of withdrawable money needed to fund the first 5 years, since you would be receiving SEPP along the way...



  • Stubble
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Re: Deciding Between SEPP and Roth Ladder?
« Reply #1 on: July 24, 2014, 08:54:08 PM »
Rule of thumb: if you need access to retirement funds a few years before you would have access anyway (say you are 54), 72t SEPP is a good tool.

But it's unlikely to generate enough cash flow to support a truly early retirement, and it's too rigid to cope with the surprises life inevitably throws your way over the long haul. You can't realistically plan your budget for the next 19 years at age 40. For this, getting to make year by year decisions with the Roth conversion route is a good thing. (And if hyper optimizing your tax return is something you're into, you need the flexibility of getting to dial in your income each year.)
« Last Edit: July 25, 2014, 03:25:22 AM by Cyrano »


  • Magnum Stache
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Re: Deciding Between SEPP and Roth Ladder?
« Reply #2 on: July 24, 2014, 09:50:28 PM »
Have you looked into how much you could withdrawal with SEPP?  This calculator is an okay tool.  For instance, if I have 500K and want to start withdrawing at age 45, the max is less than $17K per year.  That kind of limits the SEPP usefulness to me.