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SEPP Duration Question

Posted
Last Updated On
ByEd_B

L1: SEPP Duration Question
I have a question regarding the amount of time that the IRS
requires for a SEPP to run. I have searched the web and the
IRS web site but did not find a clear answer.
I retired on 10/1/2004, rolled my 401k plan money into an IRA
in February 2005, and started taking quarterly SEPP payments
as of 3/15/2005. Since the 1st quarter of 2005 had not yet
ended at the time of my 1st payment, all 4 quarterly payments
for 2005 were received.
I need to know when I can stop taking SEPP payments without
running afoul of IRS rules and having my SEPP disqualified and
having to pay the 10% early withdrawal penalty plus interest on
all of my SEPP payments. I know that I must SEPP take pay-
ments for the longer of 5 years or until age 59.5 before halting
them. Since I started my SEPP at approximately age 55.5, I
assume that I can stop the payments at age 60.5, which will
occur in February of 2010. What”s tripping me up here is the
IRS definition of 5 years. Is that 5 full calendar years, such as
from 2005 through the end of 2009? Or is it from 3/15/2005
through 3/15/2010? Do I need to continue the payments
through all of 2010 or can I stop with the March payment?
Any help with this question would be MUCH appreciated.

Ed_B
2007-01-11 16:47, By: Ed_B, IP: [67.170.159.37]

L2: SEPP Duration QuestionStart by using the last payment date calculator. Enter the exact information including the first distribution date and the calculator will generate the first date on which the plan can be modified.
Ifindeed the 5-year rule governs, the plan would typically last for 5 time 365 days plus 2 additional days for possible leap years. During those 5-years, the plan must distribute the calculated annual distribution times 5.
Hope this helps.2007-01-11 17:06, By: Gfw, IP: [74.136.109.63]

L2: SEPP Duration QuestionDear Ed-B,
GO back in the forum to a posting by ARLO on 10-18-2006. I think it is titled DOUBLE CHECKING FINAL DISTRIBUTION. One reply is from Bill Stecker (The Badger) and it should answer your question once you apply your facts to his list of requirements. To get to that older posting,select the VIEW ALL check mark button on left side below the # of months, then hit enter and let it reload all of thoseposting subjects. Then use page down or the down arrow to get back to that date. It shd help you. KEN2007-01-11 18:34, By: Ken, IP: [151.199.20.45]

L2: SEPP Duration QuestionKen … The procedure to follow for the 5-year rule was clearly out lined in Arnold v. Comm., 111 TC No. 12 (1998) and is pretty much as I outlined above.
Once the 5 distributions are made merely make no changes or other distributions until the after the 1st payment modification date.. 2007-01-11 18:49, By: Gfw, IP: [74.136.109.63]

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