Social Security, Roth Conversions, Annuities, and Rule of 55: Q&A #2532

August 9, 2025

Jim and Chris discuss listener questions on Social Security timing strategies, Roth conversions in an RMD year, annuity return calculations, account sourcing for SPIA purchases, and Rule of 55 withdrawal rules.
(12:30) A listener asks whether his brother should delay claiming Social Security to age 70 for better longevity protection despite a narrow breakeven.
(35:15) George asks if he can complete a Roth conversion before taking his first RMD and when a QCD would fit in that sequence.
(58:15) Jim and Chris respond to a question on how to calculate the return on a lifetime income annuity.
(1:11:15) The guys address which account—IRA, Roth, or brokerage—is best for funding a future SPIA purchase.
(1:19:45) A listener asks if they can take penalty-free withdrawals from a previous 401(k) under the Rule of 55 while working elsewhere, and whether the rule would apply to both plans after leaving the current job.

Show Notes:

This is from the IRS final RMD regulations:

(f) Determination of whether a distribution is a required minimum distribution —(1) Determination for calendar year of distribution. Except as provided in paragraphs (f)(2) and (3) of this section, if a minimum distribution is required for a calendar year, then the amounts distributed during that calendar year are treated as required minimum distributions under section 401(a)(9) to the extent that the total minimum distribution required under section 401(a)(9) for the calendar year has not been satisfied (and accordingly, those amounts are not eligible rollover distributions). For example, if an employee is required under section 401(a)(9) to receive a minimum distribution for a calendar year of $5,000 and the employee receives a total of $7,200 in that year, the first $5,000 distributed will be treated as the required minimum distribution and will not be an eligible rollover distribution, and the remaining $2,200 will be an eligible rollover distribution if it otherwise qualifies. If the total section 401(a)(9) required minimum distribution for a calendar year prior to the calendar year of the distribution is not distributed in that calendar year (for example, when the distribution for the calendar year in which the employee reaches the applicable age is made on April 1 of the following calendar year), then the amount that was required to be distributed, but not distributed, is added to the amount required to be distributed for the next calendar year in determining the portion of any distribution in the next calendar year that is a required minimum distribution (and, thus, is not an eligible rollover distribution).

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