Substantially Equal Periodic Payment (SEPP)

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Substantially Equal Periodic Payment (SEPP)

Nathan S.
Rental Property Investor · Minneapolis, MN · Member since 2016 · 50 posts · 15 votes

Anyone out there research this? My goal is to retire and live off of income of six single family home investments by age 55. They need to be free and clear and the thought was to use my 401k through the SEPP program in my early 50's if I need the funds to help pay off the remaining mortgages.  There isn't any fear of the rental units not supporting my retirement so not having the 401k funds in my later years won't be an issue.

Thanks in advance!

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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
7y
Originally posted by @Nathan S.:

Anyone out there research this? My goal is to retire and live off of income of six single family home investments by age 55. They need to be free and clear and the thought was to use my 401k through the SEPP program in my early 50's if I need the funds to help pay off the remaining mortgages.  There isn't any fear of the rental units not supporting my retirement so not having the 401k funds in my later years won't be an issue.

Thanks in advance!

Its called 72(t) Distributions. You have to separate from your employer to do this for 401k funds( If IRA, there is no separation requirement as IRAs are not connected to the employer).

There are timing, length, and amount of requirements. Your trustee of 401k should help you al these. Have you talked to them? Also, I would recommend talking to a financial planner to determine if you really have retirement planned properly. 

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    7y
    Originally posted by @Nathan S.:

    Anyone out there research this? My goal is to retire and live off of income of six single family home investments by age 55. They need to be free and clear and the thought was to use my 401k through the SEPP program in my early 50's if I need the funds to help pay off the remaining mortgages.  There isn't any fear of the rental units not supporting my retirement so not having the 401k funds in my later years won't be an issue.

    Thanks in advance!

    Its called 72(t) Distributions. You have to separate from your employer to do this for 401k funds( If IRA, there is no separation requirement as IRAs are not connected to the employer).

    There are timing, length, and amount of requirements. Your trustee of 401k should help you al these. Have you talked to them? Also, I would recommend talking to a financial planner to determine if you really have retirement planned properly. 

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®5241 Reviews
    WebsiteView Page
    TaxMD® | Tax Planning Software
    WebsiteView Page
    1Reply
  • Scott JensenPro Member
    Financial Advisor · Blaine, MN · Member since 2014 · 477 posts · 387 votes
    7y

    @Nathan S.  72(t) distributions might work, but it would probably be better to free up the 401(k) money in advance with roth conversions.

    You could run the numbers either way but I would be surprised if 72(t) distributions worked out better.

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  • Nathan S.
    OP
    Rental Property Investor · Minneapolis, MN · Member since 2016 · 50 posts · 15 votes
    7y

    Thanks @Ashish Acharya and @Scott Jensen.  I am 18 years away from retirement, but I like to research and plan ahead!  Of course, the laws and rules could change between now and then too.

    1Reply
  • TJ P.
    Investor · WI OH · Member since 2015 · 113 posts · 36 votes
    6y
    Originally posted by @Nathan S.:

    Anyone out there research this? My goal is to retire and live off of income of six single family home investments by age 55. They need to be free and clear and the thought was to use my 401k through the SEPP program in my early 50's if I need the funds to help pay off the remaining mortgages.  There isn't any fear of the rental units not supporting my retirement so not having the 401k funds in my later years won't be an issue.

    Thanks in advance!

    What did your research reveal, Nathan?

    End up using it?

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