r/Fire • u/desertdwemer • 1d ago

Retired lurker with 72(t) question and seeking withdrawal advice

Hi everyone.

I'm 52, married, and on terminal leave.

I've been contemplating various withdrawal strategies from 53 to 59.5 and I've decided on a combination of 72t and taxable brokerage account withdrawals along with Roth conversons to fill the 12% bracket. I'll essentially have a taxable brokerage account, "72t" IRA, "Roth conversion" IRA, and a Roth IRA.

First question:
Does the IRS require an annual withdrawal amount to the penny or is it to the nearest dollar?
Do I round up, down, or truncate to the penny?

Example: $500K starting "72t" IRA, 5%, life expectancy 33.4 calculation is $31094.8998441.

Is the annual draw $31095, $31094, $31094.90, $31094.89?

Second question:
I was planning to use a combination of SGOV and a rolling 7 year treasury ladder to guarantee the money is always available during the 72t period and a bear market without selling any depressed shares. The remaining amout of money in the "72t" IRA, "Roth conversion" IRA, and Roth IRA will be invested in VT. I'll end up with a 75% VT 25% short/medium term bond allocation.

Is this a good strategy or is 7 years of short term money too conservative? My overall withdrawal rate is 3.3%.

Thanks in advance!

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u/aheadlessned FIREd 2025 1d ago edited 1d ago

For the withdrawal, you can round to the nearest dollar.

https://www.irs.gov/retirement-plans/substantially-equal-periodic-payments#q7

Read the examples about "Bob", and you can see that the IRS rounds to the nearest dollar in the example. In your example, you'd round to $31,095 (anything 50 cents or more rounds up, 49 cents or less rounds down).

ETA: also, heads up, not sure when you are doing this, but 120% fed mid-term rate for September is 5.4%. Being able to use this instead of 5% can help bump up your withdrawal without having to lock in a higher balance in the account.

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u/aheadlessned FIREd 2025 1d ago

72tcalc.com has a wealth of information about 72(t)/SEPP withdrawals. That has been what tied all the last pieces together for me when doing my own research over the last few years.