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New 72t calculation near year end

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ByJT

L1: New 72t calculation near year end>I am dealing with a number of employees who are being offered an Early Retirement Package. Their last day of employment will be near the end of November, so there is a good chance that some of their roll-overswill not arrive until after Jan 1, 2003. If we establish the IRA account and document the distribution method using 2002 interest rate rules for a distribution to begin sometime in 2003, would that be acceptable if the IRA account was still empty come 12/31/2003?2002-10-11 14:05, By: JT, IP: [127.0.0.1]
L2: New 72t calculation near year endYou can’t make a distribution until you know the payment. You can’t know the payment until you know the IRA balance. You won’t know the IRA balance until 2003. What event/occurance would make it a 2002 plan? 2002-10-11 15:19, By: Gfw, IP: [127.0.0.1]

L2: New 72t calculation near year end>The IRA account will be opened in 2002 and we will know the amount of the rollover to be coming from the company’s retirement plan for calculation purposes, but the check may arrive after 12/31/2002. Wouldwe have to use calculations based on when the check arrives? I would hate for my clients to be dependent upon the expediency of a 401k provider issuing checks!2002-10-11 15:33, By: JT, IP: [127.0.0.1]

L2: New 72t calculation near year endThe difficulty here is that the IRS has uniformly defined the beginning of a SEPP plan as the 1st distribution date. If that payment daet is not until 2003 then it is a plan that commenced in 2003 & therefore would need to comply with the revenue ruling.

However, there is another alternative. Let’s say your client has an exisitng regular IRA with $100,000 in it and further, you know the balance as of, say 12/1/02 in the 401(k); you could conceivably define the corpus of the SEPP plan as being the sum of the two; then take one distribution in 2002; thus it becomes a 2002 plan not subject to rev.rule 2002-62.

TheBadger
wjstecker@wispertel.net
2002-10-11 16:06, By: TheBadger, IP: [127.0.0.1]

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