SEPP withdrawals for ER?

[Trudie]

I am 45, my husband turns 55 this year.  ER is about 5 years away for us, at which time we can start tapping his qualified accounts.  Right now we're maxing contributions to available to us (401k, including catchup contributions; Roth IRAs, HSA, after-tax 401K).  Starting with 2016 payroll I'm starting to do after-tax 401K contributions so I can do a mega back door roth.  I'm still tweaking expenses and cash flow and will do as much as I can to try to beef up our Roths.

At our retirement age our projected retirement assets will be $1.5 million.  Of that, there should be about $165K in my husband's Roth, and about $200K in mine.

Since he will be at least 59 1/2, we can access all of his accounts without penalty.  But I've been thinking how to best allocate those withdrawals to maximize options for ACA credits.  I'm thinking that in our early retirement we may want to accelerate Roth withdrawals to minimize taxable income/qualify for credits.  Then, when he becomes Medicare eligible we can draw a higher proportion from taxable investments.

My question is whether I should consider SEPP withdrawals for my qualified accounts (especially Roths)?  And also, what are the best sources for learning about SEPP withdrawals?

[seattlecyclone]

SEPP withdrawals need to be continued in just the right amount for many years. Given that you'll have a bunch of Roth basis from your mega backdoor contributions and other things, I think you may just want to withdraw tax-free amounts as needed rather than locking yourself into the SEPP schedule.

[neil]

https://en.wikipedia.org/wiki/Substantially_equal_periodic_payments

Note that the SEPP rule applies to the 10% early distribution penalty only, and does not affect the treatment of distributions as income. In particular, Roth IRA distributions taken under the SEPP rule will be taxed as income a second time.

That makes it sound like SEPP is treated as income regardless of source and would not help with Obamacare subsidies.  Also, eww.

[El Marinero]

SEPP withdrawals need to be continued in just the right amount for many five years.

I think that they are definitely a viable option for early retirement.  Almost by definition, the maximum SEPP amount is  close to a sustainable withdrawl rate.

You may not want to do a SEPP, but you should at least consider it.  Otherwise you would be ignoring one of the few methods for penalty free withdrawls.

https://www.bogleheads.org/wiki/Substantially_equal_periodic_payments

[seattlecyclone]

SEPP withdrawals need to be continued in just the right amount for many five years.

The required period is five years or until you turn 59½, whichever is longer.