A little help…

L1: A little help…
Hello:
I’m a first-time poster and require a bit of help. I will be 55 this January and plan to retire (to devote more time to my wife who is quite ill), and plan to access my IRA using the 72(t) SEPP clause.
Ihope todevote $425K of my IRA for this purpose, and have elected to use the amortization/single life expectancy approach as a way of maximizing my monthly pay out. The mid-term rate I hope to use this January is 6.0%. It looks like I will receive about $30,684 per year via this method. Correct?
Also, I realize I must continue taking the same amount each year for 60 months, or until I’m 59and1/2 whichever comes later, but what constitutes a “year” in the eyes of the IRS? Is it a calendar year or a “rolling” year? If a calendar year, then it appears EVERYONE would have to begin taking distributions each January (if they wish the same amount sent to them each month, as I’ve elected to do). If it’s a rolling year then I guess it doesn’t matter in which month one begins taking distributions.
Concerning one’s IRA balance: I understand that one must use December 31st of the preceding year when using the minimum distribution method. But I’m using amortization, so can I choose the ending balance from any date in the current year, prior to my taking my first distribution (which in my case will be 2008)?
Lastly, are there any other pitfalls that I need to avoid to ensure that I don”t get socked with a 10% penalty?
TYIA2007-08-23 14:50, By: Reg, IP: [207.200.116.5]

L2: A little help…Reg,
The interest rate you canuse if you start your payments in JAN 2008 isONLY either the Fed 120% midterm one that is issued forNOV 07 or DEC 07, or an interest amount that is less than one of those.Those rates could both beless than the6% rate you”d like to use, so you may need to plan for that contingency. If you plan to use $425k of your IRA as the basis for the SEPP, and if you have more than $425k in that IRA, make sure you do a direct transfer of that specific amount toanew IRA first, then the remaining balance can be used for emergency withdrawals, which would cause the 10% penalty, but would not touch, and therefore would not jeopardize your SEPP IRA plan. If yoiu stay with same custodian, tell them that you need separate account nubmers for these two IRAs, and fill out the beneficiary form on the new one. If you start taking payments in January 2008, you will turn 60 in the month when you no longer have to take the payments (Jan 2013). If you take them monthly, then 60 payments later it is December 2012, and your can stop those payments after that one, and thenstart taking a different amount a few days after that Januaryfirst payment date passes.. but now inJanuary2013, since you are over 59 1/2 and have done the 5 year payment plan. There can be no additions or transfers to or from the SEPP IRA account while it is in force, and you can only take out the prescribed payments for each calendaryear, and not more or less, or you “Bust” the plan and are subject to 10% penalty on all withdrawals, and possible interest from the IRS.With regard to the date of the balance used to fund the calculations, if you had the new IRA setup in Nov 2007, you could use that 11/30/2007 statement to document the balance that you use to calculate the SEPP. It does not have to be the 12/31/YY balance, especially if you want an early Jan uary first payment, since the December statement may delay the SEPP setup with your custodian.This is a start, and others may have better info to add. Ken2007-08-23 15:47, By: Ken, IP: [75.67.65.254]

L2: A little help…The only thing I would add is that you can use a beginning account balanceno more than6 months prior to the start month without getting on thin ice. Of course, make absolutely sure that you contributed no new funds or distributed funds between the date of the account balance you use and the start of your plan.2007-08-23 22:01, By: Alan S., IP: [24.116.165.60]