Any of you knowing about financial stuff peeps

[FirstandGoal]

I really need some financial advice.
Last month I left my job of almost 10 years and I am for the first time in 20 years unemployed.
So I get my profit sharing stuff from my old employer today and I have a little over $66,000 in the account.
I am at a crossroads in my life.
Basically gone through a lotta crap in the last year, and just need to decompress for a little while and spend time with the family and maybe look into just some part-time work in my field on a releif basis, which would give me some income, but not enough to pay all of the bills.
I have decided that I am not going to roll over the profit sharing account. I have saved for retirement in other accounts, so I am not really worried about this money, and quite frankly I will need it to live on till I can decide what direction my career needs to take, which may be at least a couple of more months, as I am looking into getting certified in other areas of my profession, and just basically trying to figure out what the heck to do with my life.
Here is the main question:
What is the best way to cash this out as far as taxes?
Should I take a lump sum payment?
Should I opt for a 24 month disbursement or a 36 month disbursement?
My last accountant was my ex-mother-in-law, so I haven't found one yet for this year.

I really have to decide something by next week because it will take about 2-3 weeks for the money to get to me and I am living off of savings right now.

TIA

[fadada1]

blow it all on a kick *** drag boat!!!

[Taxman71]

Generally, spreading the income over two or more tax years will save you tax dollars by staying out of a higher tax bracket. You just need to run some tax projections based on your other income and expected deductions to see which way is best. Thus, if your cash flow allows, a 24 or 36 month payout may save you some tax dollars. Plus, if you change your mind about the rollover, you can keep the funds in the tax-deferred account. Since retirement accounts (the tax deferred kind) are exempt from your creditors, you have another reason not to take a lump sum.

[critical_phil]

Generally, spreading the income over two or more tax years will save you tax dollars by staying out of a higher tax bracket. You just need to run some tax projections based on your other income and expected deductions to see which way is best. Thus, if your cash flow allows, a 24 or 36 month payout may save you some tax dollars. Plus, if you change your mind about the rollover, you can keep the funds in the tax-deferred account. Since retirement accounts (the tax deferred kind) are exempt from your creditors, you have another reason not to take a lump sum.

this sounds all fancy-pantsy, but you know what rich people do:


cash and mason jars.........

[Taxman71]

With free time and excess cash, I like the approach the guy in American Beauty took. Just don't get shot.

[FirstandGoal]

Generally, spreading the income over two or more tax years will save you tax dollars by staying out of a higher tax bracket. You just need to run some tax projections based on your other income and expected deductions to see which way is best. Thus, if your cash flow allows, a 24 or 36 month payout may save you some tax dollars. Plus, if you change your mind about the rollover, you can keep the funds in the tax-deferred account. Since retirement accounts (the tax deferred kind) are exempt from your creditors, you have another reason not to take a lump sum.

This makes sense, but I forgot to mention that spreading the payment over 24 months would reduce to me to 50% of my former income. I'm not so concerned over that, because I do plan on doing relief work to supplement, as well as doing it to see other areas of my profession to give me an idea of where I want to go with it. However, if I supplemented this disbursement with enough income to receive my normal income, wouldn't the taxes be the same?

I'm not really worried about creditors-Ha my divorce last year pretty much cleaned me out and I'm good on all of that. I guess my big question is would I be better off taking the lump sum and investing it over time?

[Taxman71]

That is why I conditioned that on having enough cash flow until your income rises back to its original level. That may answer your questions for you.

I don't see any advantage of taking distributions from a tax-deferred account (and paying Federal and State income tax, plus early withdrawal penalties on the distributions) and reinvesting that money elsewhere. You lose upwards of 35% in immediate tax, 10% penalty (if early) plus your creditor protection mentioned above. Plus, the income on your new investment would be taxed each year rather than added back to principal. Unless the new investment involves getting in on the ground floor of the next Microsoft, that does not make sense financially.

I, **GENERALLY**, only advise people to take distributions from their retirements accounts if they need the money to pay debts, bills, expenses, etc. Not to reinvest elsewhere. Thus, take distributions to pay your bills (and OU Season ticket fees), but think hard before reinvesting elsewhere.

[FirstandGoal]

That is why I conditioned that on having enough cash flow until your income rises back to its original level. That may answer your questions for you.

I don't see any advantage of taking distributions from a tax-deferred account (and paying Federal and State income tax, plus early withdrawal penalties on the distributions) and reinvesting that money elsewhere. You lose upwards of 35% in immediate tax, 10% penalty (if early) plus your creditor protection mentioned above. Plus, the income on your new investment would be taxed each year rather than added back to principal. Unless the new investment involves getting in on the ground floor of the next Microsoft, that does not make sense financially.

I, **GENERALLY**, only advise people to take distributions from their retirements accounts if they need the money to pay debts, bills, expenses, etc. Not to reinvest elsewhere. Thus, take distributions to pay your bills (and OU Season ticket fees), but think hard before reinvesting elsewhere.

Thanks for the advice, I'm starting to think about just taking enough out to get me by for the next 2-3 months, and leaving the rest in the account, or maybe rolling it into another account.

[Frozen Sooner]

Great advice here.

I'd maybe look at a decent immediate variable IRA annuity for the rollover. This might alleviate some of the tax issues.