What the Private Credit Headlines Got Wrong, The Rule of 55 & The $1.3B Tax Mistake

The US men's hockey team won gold for the first time in 40 years. Private credit is making headlines as the next 2008 crisis. And the Rule of 55 might help early retirees access their 401(k)s penalty-free.Adam and Andy start with the miracle on ice moment, then get into the private credit panic sweeping financial media. Blue Owl's pricing shock revealed a 16% discount between stated value and market value, triggering fears about what's really inside private debt funds. Data from Cliffwater tells a different story: defaults below historical averages, yields hovering around 9%.Then they explain the Rule of 55, a break-glass-in-case-of-emergency strategy that lets people access 401(k) funds penalty-free between ages 55 and 59½. Finally, Adam breaks down estimated taxes and why $1.3 billion in underpayment penalties hit high earners in 2024, triple the 2021 amount.⏱️ Timestamps: (1:31) Intro: US Olympic hockey gold after 40 years(3:42) Private credit making headlines as the next crisis(7:12) Blue Owl pricing shock: 16% discount revealed(10:19) Cliffwater data: Yields above 9%, defaults below normal(14:09) Rule of 55 explained: Break glass in case of emergency(18:00) When does using the Rule of 55 actually make sense?(19:35) Downsides: Lost tax-deferred growth and potential higher tax brackets(22:26) Estimated taxes: $1.3 billion in penalties for high earners in 2024(27:45) Two safe harbors: 90% of current year or 100-110% of prior year(29:40) Projecting tax liability with variable income sources(37:37) Podcast disclosuresResources:Long Story Short website | burneywealth.com/podcastFollow Burney Wealth Management on LinkedIn | www.linkedin.com/company/burneywealthmanagement Follow Adam Newman on Linkedin | www.linkedin.com/in/adam-newman-cfa-cfp%C2%AE-mst-ricp%C2%AE-cepa-48853916/ Follow Andy Pratt on LinkedIn | www.linkedin.com/in/andyjpratt/ Alex Shen’s post about Private Credit | www.linkedin.com/posts/alexshen7_more-cockroaches-dont-hold-your-breath-activity-7431549039994843136-9jpBWall Street Journal Article: “Estimated Taxes Are a Pain. Here's How to Avoid Costly Penalties” | www.wsj.com/personal-finance/taxes/estimated-taxes-are-a-pain-heres-how-to-avoid-costly-penalties-d71cf00dCliffwater: New Private Credit Data Contradicts the Recent Risk Narrative | https://cliffwater.com/ResourceArticle/new-private-credit-data-contradicts-the-recent-risk-narrative?docId=30429 Cliffwater: After Misstep, Blue Owl Gets It Right, Unlike the Press | https://cliffwater.com/ResourceArticle/after-misstep-blue-owl-gets-it-right-unlike-the-press?docId=30427 #PrivateCredit #RetirementPlanning #TaxPlanning #WealthManagementThe Burney Company is an SEC-registered investment adviser. Burney Wealth Management is a division of the Burney Company. Registration with the SEC or any state securities authority does not imply that Burney Company or any of its principals or employees possesses a particular level of skill or training in the investment advisory business or any other business. This content is for informational and educational purposes only. It is not intended as personalized investment advice or a recommendation.