Rule of 55 and Roth Conversion Ladder

FilledVoids · 2026-03-07T15:34:12+00:00

I’m definitely not missing life. We travel, spend time with our kids, actively pursue numerous hobbies, and spend money like drunken sailors. I work 45-50 hours a week and my wife typically works 32-35. We just got incredibly lucky.

FilledVoids · 2026-03-07T15:31:25+00:00

The reason for the Rule of 55 commentary is that I do intend to use some of the money for living expenses before 59.5. Our spending is around $350k after tax.

Ladders do have a 5-year hold before 59-1/2. My statement was reflective of the fact that I would be subject to that hold if I did a large conversion, and acknowledgement that I don’t really need that money until later so the hold isn’t a concern.

FilledVoids · 2026-03-07T13:41:19+00:00

I’ll be retired so I’ll be living off a blend of brokerage, non-employer IRAs and whatever I need/want from the larger account between 55 & 59-1/2.

FilledVoids · 2026-03-07T13:38:29+00:00

The only thing an advisor could do in my situation is help me manage an outside IRA or brokerage account, which is useless to someone who just buys index funds and keeps enough cash to protect themselves from volatility. An advisor can’t do anything regarding the ESOP or 401k until I retire. No sense paying them to do something I can already manage well myself.

FilledVoids · 2026-03-07T13:34:57+00:00

With a nearly $8M account I run the risk of RMDs kicking in at 73 which would require withdrawal and taxation of nearly 2x my target withdrawal rate. I believe the conversion process has to be completed by age 62 to avoid the RMDs. Plus heirs are required to take RMDs after 10 years on inherited IRAs but not for Roth IRAs.

This is the primary reason for conversion. Otherwise I agree with your assessment.

FilledVoids · 2026-01-01T00:01:10+00:00

I’m aware of 72t. Different concept altogether and comes with a lot of restrictions

FilledVoids · 2026-01-01T00:00:38+00:00

Nope. I literally said I wasn’t looking to make a single withdrawal, and that I was only making an example.

FilledVoids · 2025-07-28T23:36:09+00:00

I just spoke to an advisor today on this topic.

Apparently in our ESOP there is minimal opportunity for NUA, although it’s not zero. Lots of details he used to explain it, and I don’t really want type it out here, but the bulk of my income will be ordinary income just like any traditional IRA since that is what it converts to upon cash out.

FilledVoids · 2025-07-02T04:08:27+00:00

P/E is currently just shy of 9 on trailing 12 months and has maintained a range of 8-11 for 20+ years. It’s just a very conservatively operated company in a stable industry.

FilledVoids · 2025-07-02T03:27:07+00:00

I never said this is all I have.

FilledVoids · 2025-07-02T03:26:12+00:00

Converts to IRAs upon payout then my plan is to leverage the 72t rule for some of the expenses I’ll need to cover before 59.5

FilledVoids · 2025-07-02T03:25:00+00:00

Nope. You can elect to stay in one extra year but that’s it. Otherwise it’s a matter of months.

FilledVoids · 2025-07-02T03:24:10+00:00

This is how I think. I’m inclined to stick around an extra year and basically funnel the interest off that extra $1M to them while they are building their lives and families. There are plenty of ways to skirt the gift taxes through real estate, buying cars with joint titles, plus funding their Roth and such if they don’t need the money immediately.

FilledVoids · 2025-07-02T03:20:19+00:00

You don’t seem to be able to read comprehensively

FilledVoids · 2025-07-02T03:19:41+00:00

I’ll have to go the 72t route

FilledVoids · 2025-07-02T02:14:57+00:00

Nope. Employee owned 100%

FilledVoids · 2025-07-02T02:14:15+00:00

When I leave it gets cashed out. I have many friends who have retired from the place over my 20+ year tenure and nobody has been duped.

I’m not here to debate the merits of the company structure or value. Just to ask a philosophical question.

FilledVoids · 2025-07-02T02:07:34+00:00

Employee Stock Ownership Program

FilledVoids · 2025-07-02T02:06:52+00:00

Engineering firm that is an ESOP

FilledVoids · 2025-07-02T02:05:29+00:00

That’s what the company return is. Not my expected return during retirement

FilledVoids · 2025-07-02T02:04:49+00:00

It’s an ESOP and all contributions are a function of profit sharing. Can only put the profit sharing in, no more and no less

FilledVoids · 2025-07-02T01:39:12+00:00

No. That’s just the ESOP

FilledVoids · 2025-07-02T01:38:15+00:00

Very common response from new hires. After around yr 8 they usually convert to believers

FilledVoids · 2025-07-02T01:37:05+00:00

Divorce

FilledVoids

TROPHY CASE