Strategic Rollouts as Tactical Retirement Rescue Plans

Dear Readers,

This message is for someone with more than 70% of their retirement savings invested in the market in a traditional account such as a 401k or an IRA, essentially pot committed, and has maybe heard about something called the strategic rollout.

Maybe the term came up because you’ve been wondering if you’re overfunding your 401k, googling some articles, hearing it on a podcast, or seeing it somewhere on YouTube. But what exactly is a strategic rollout, and why should it matter to you?

In this context, let’s examine the scope and reason why someone would want to do this, and what they would do with their money as they roll it out.

What is a strategic rollout?

It is a systematic withdrawal from specified retirement accounts, ahead of schedule, with the sole intent of systematically reallocating into a more favorable vehicle over time, and lessening the taxes or penalties by spreading the impact or responsibility into smaller increments over many years.

This is an emergency rescue mission but remember, a stitch in time saves nine.

And while folks might think it feels like a surgical procedure today, several years later they'll look back and realize it was just ripping a bandaid off.

Who is it for?? AND WHY WOULD THEY WANT TO DO THAT?

Possibly for someone who is pot-committed with most or all of their retirement savings in a 401k or IRA and has second thoughts about the implications of where their money is.

There are several reasons one might not be confident or comfortable with the amount of savings exposed to factors outside their control.

Simply put, a strategic rollout is for someone who doesn't want to get stuck holding the bag.

If you are left holding the bag, you are put in a situation where you are responsible for something, often in an unfair way because other people fail or refuse to take responsibility for it.

Next, I’ll cover what kind of bag someone might get stuck with…it’s more expensive than a Birkin.

What is the potential problem with being pot-committed into a 401k, IRA, Money Market, or market volatility-linked account?

It's a classic, put all your eggs in one basket scenario, if too much of the nest egg is vulnerable, it might not match the investor's risk profile.

They’re NOT tax-advantaged, it is tax deferred. Don't underplay the value of how the account is taxed, skip taxes on the way up, and pay them on the way out... In 20 or 30 years the tax rates could be MUCH higher and could do major damage to retirement withdrawals in those tax-deferred accounts.

Many experts say taxes will be forced to increase by 100% from the current rate to support Social Security, Medicare, and Medicaid.

• Medicare: Experts estimate that medicare spending by the government, aka Johnny Taxpayer, will double from $1 trillion to $2 trillion by 2033.
• Medicaid: Spending will increase by 67% from $592 billion to $879 billion.
• Social Security: They don’t know what to do with it yet but the primary trust fund that bankrolls the program is expected to run dry by 2033. Tick tock.

Meanwhile, the United States government is over $31 TRILLION in debt. So don’t hold your breath if you’re waiting for a fair solution, that makes sense, or that they can agree on.

The government has choices:

a) Make people wait longer to receive benefits

b) Reduce benefits paid out

c) Make them harder to qualify for so fewer people collect

d) Print more money (get ready for $20/gallon or for a dozen eggs)

e) Increase taxes by 100%

1) If they try to tax businesses instead, doesn’t that get passed along to us in the form of price increases?

2) The business could lower its forward guidance on earnings calls and cause stock prices to plummet - oh no - that’s the market volatility ravaging your account again

3) The devil is in the details (tax us directly, tax us indirectly, we still pay)

So for those people gambling that taxes won't have to significantly increase in the future to help keep some version of these programs afloat, good luck.

Why would they not want to consider this?

Well for starters, if they're under 59 1/2 they're taking an early withdrawal penalty of 10% on the withdrawn amount and paying income taxes on it. It's an ouchie that not everyone can accept. Understandable.

For people over 59 1/2, they don't have the early withdrawal penalty but it does get taxed. Also, they are a little further down their path so there’s not as much of an accumulation runway but that doesn't mean it's never worth it. While the primary benefits are not usually accumulation, they're excellent for tax-free transfer of wealth and a defacto long-term care planning.

Another reason is maybe they wouldn’t qualify or they have a big chunk of change stored under the mattress or in the bank that could be deployed instead.

It’s important to get a realistic snapshot of the exact situation before taking this kind of action.

What happens to the money once it's withdrawn?

As it's being strategically rolled out, it needs somewhere to be moved to, otherwise, it's just cash and losing value right?

So it gets rolled into a strategic tax-free retirement account under the insurance umbrella because once it's there:

1) can be funded with virtually no contribution limits ?

2) cash reaccumulates tax-free ?

3) cash can be withdrawn tax-free ?

4) cash can be withdrawn for any time, any reason with no penalty ?

5) The balance is transferred as a death benefit to beneficiaries tax-free ?

6) Stay ahead of inflation ?

7) Account value is protected from market loss ?

8) Early death benefit payouts in the event of chronic or ?terminal illness act as its long-term care because the money can be used to pay for medical treatment or anything the owner wants while still alive

Hooray if you’ve made it this far.

So either you’ve been thinking of doing this and you’re thinking of asking me to help you meet your goals or this doesn’t apply to you but you still learned something anyway, in which case I’m happy.

As I mentioned this was probably more relatable to the person who might be in the second half of their working years but the general importance of the tax-free retirement account is valid for all career stages.

It’s just a matter of whether you could qualify and 1) whether it's a rescue mission or 2) a pre-emergency account setup.

All my best,

Chris Kaden

Income Optimizer?I Kaden Prosperity Protectors?I Powered by FINLine Financial?

Proudly serving families in TX, FL, OH, GA, IN, IL, LA, WV, VA, NE, MO, NC

About me www.dhirubhai.net/kadenprosperityprotectors

Schedule an appointment www.calendly.com/ckaden