Clarification please

L1: Clarification pleaseI turn 55 in Feb of 2008 and I’m looking at starting an amortized 72t with $400000 in September of 2007. That gives me 60 months (or exactly 5 years) until I’m 59.5 in August of 2012. The payment calculator shows I would get $27,524 a year. If I want that in monthly payments does the plan take my 5 years and add them together and then divide by 60 months so I would get $2293 per month or do the short years on each end of the plan get divided by the months of that year that I’m in the plan. For example, would the last 4 months of 2007 pay out $6881 per month and the 8 months in 2012 pay out $3440 per month?

As for the word Bust۝. I think I’m pretty clear on the fact that once the plan is up and running there is one opportunity to switch it over to a minimum distribution but if I were to reach into it for any other reason, that would Bust۝ it and I would be looking at substantial interest penalties. What I don’t understand about the word Bust is the column on the calculator page that says Cost to Bust۝. Is there someone here that can explain that for me?

Thank you and this is a great site!2007-06-25 12:38, By: KennyMike, IP: [144.5.224.142]

L2: Clarification pleaseKennyMike”s question in his first paragraph is the same one I came here to post. Spooky. I look forward to a definitive response.
HunterQuinn2007-06-25 14:09, By: bertie, IP: [4.249.9.201]

L2: Clarification pleaseYou can prorate the first and last year, (If being paid monthly, compute monthly amount from your annual amount, then just take monthly amount for each month once you start in first year and during the last year that fulfill your 60 months of payments since you will have met the 5yr and over 59.5 requirement at end of that five year time) or you can elect to take a full year distribution in the first calendar year, even if you start in September. My own experiences will show you how it can be done. My first 72t started in March 2006, and I elected to take two payments per year.. one at end of March and other at end of Sept. I divided the full year amount by two, and instructed by custodian to send me half a year payment each time for the next five years, when I will be 61. I started a new 72t on a second IRA account I have in May 2007, when I decided to buy asecond home. These monthly payments will pay most of the mortgage. Because I started it in May 2007, I told the custodian in my startup paperwork that the annual amount was (I”ll use simple example) $24,000 and I wanted monthly $2,000 payments starting May 5th, but first payment (in May) was to cover first five months of the year 2007,or $10,000, and all other monthly payments were to be $2,000 per month for the five year period. They handled it for me. I hope this helps.Remember to pick a payment date early in the month in case custodian has a problem. It will give you a chance to contact them and correct it (if you notice no payment or wrong amount paid in December)so it can be corrected by 12/31/xx of the year, so the total payments (and your 1099-R) are correct when matched against your written payment plans for your 72t plan each year. KEN2007-06-25 16:44, By: Ken, IP: [75.67.115.75]

L2: Clarification pleaseThank you Ken… that does help. And from reading other posts it seems clear that the yearly $$$ are ANNUAL and each year youmust takethat amount. Where you chose to have one BIG month and the remaining months equal amounts… it appears I can just have 4 equal payments that add up to the ANNUAL amount the first year… and then monthly payments the following year…what about having the custodian take the money annually, put it in a mutual fund account and send checks every other week??? Is there a reason that isn’t a good idea???

In relation to my Cost to Bust۝ question_ I get it now_ the senior moments have already started!?!

This is big stuff for me as 35 years in the corporate world comes to an end on August 1st and I want to spend the next 5 years doing something I love (don’t get me wrong, I enjoyed the corporate gig) but will only be making half of what I”m used to making. This SEPP will help me maintain a comfortable lifestyle until I get to the pot of gold at 59 _.2007-06-27 06:40, By: KennyMike, IP: [144.5.224.142]