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post #26 of Old 11-12-2012
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Re: My Escape Plan - Insights Wanted

One more comment. $5000 a year for insurance is *RIDICULOUS*...that amount is likely for an agreed value yacht insurance policy with a low deductible. I have a $126k agreed value policy with liability/indemnity for *FLORIDA* with navigation up to the Northeast and out to the Turks/Caicos and it costs me $1700 a year for a 34-35' sailboat docked behind my house. Older boats, of course, will pay more...but then you dont need a full agreed value policy on an old boat because they're just not worth that much and you're better of "self insuring".

For you, who would likely just get indemnity/liability coverage in case you hit someone, or you case some kind of environmental disaster with your fuel spill. Liability insurance with a good umbrella policy of $1MM should be much much much less. I got a quote for a umbrella policy for $1mm coverage for $300 today from Geico...just required my yacht liability policy to have a $300k minimum coverage.

Now, you could also play all sorts of asset protection tricks. The worst that would happen then would be that you lose the boat in case of an accident. IE, form a Florida LLC ($125 up front + $138 a year) and put the boat title in the LLC name. Now, if you're willing to lose the boat (which if you have liability only, would happen anyway)'re pretty much scott free except your PERSONAL liability for causing damage (again get a good umbrella policy to protect you there).

There are ways for those that are savvy to deal with the liability bugaboo...doctors are really good at this.

Its the rest of your budget that concerns me.

Also, *DO NOT* withdraw from your 401k early. If you do, you'll get whacked with a 10% penalty and pay taxes on the withdrawl. If you can, take "DISTRIBUTIONS* from your 401k. There is a subtle difference. Distributions of "substantially equal periodic payments" are not hit by the 10% penalty...just ordinary income. And if you're taking less than $15k a year, well, you'll pay some taxes, but likely get it back in credits. Welcome to being one of the "47%" Basically, you need to "annuitize" your 401k

See this from IRS site on retirement plans here:

Is there an exception to the tax for distributions in substantially equal periodic payments?
Yes. If distributions are made as part of a series of substantially equal periodic payments over your life expectancy or the life expectancies of you and your designated beneficiary, the 72(t) tax does not apply. If these distributions are from a qualified plan, not an IRA, you must separate from service with the employer maintaining the plan before the payments begin for this exception to apply. If the series of substantially equal periodic payments is subsequently modified (other than by reason of death or disability) within 5 years of the date of the first payment, or, if later, age 59, the exception to the 10% tax does not apply. In that case, your tax for the modification year is increased by the amount that would have been imposed (but for the exception), plus interest for the deferral period.

S/V Jendai
Beneteau 343

Last edited by night0wl; 11-12-2012 at 09:18 PM.
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