definitiion of “annual’

L1: definitiion of “annual’I have a friend who is going to begin 72t distributions this month. He wonders if he can take a full year in 2002 (late July) and the full year for 2003 in January? Thereafter he would take annual distributions each January.Thanks for any help.2002-07-02 12:06, By: Terry, IP: [127.0.0.1]
L2: definitiion of "annual’The simple answer is NO! The definition of annual hasn’t changed – each annual payment should occur 1 year appart.If he takes an annual distribution in July, then he should take the next annual distribution next July. If the plan states that in the first “stub” year, 1/2 of the annual payment will be taken and then annual payments were to occur in January of each year thereafter – no problem.The written plan should outline the payment frequency.2002-07-02 12:58, By: Gfw, IP: [127.0.0.1]

L2: definitiion of "annual’This is an issue in which Gfwe & I disagree. Then again, some would suggest that the IRC is intentionally written in a manner to cause disagreements. I think taking a full year SEPP in 7/02 followed by a full year’s worth in 1/03; followed by 1/2 year in 1/04 & another 1/2 year’s worth in 10/04; etc. is just fine. Here is why:(1) ʤ72(t) specifically tells us “not less frequently than annually” thus an upper ceiling is set; however, there is NO, and I mean NO statutory guidance or support in any documents of authority on regulating “more frequently” than annually. (2) In a roudabout way 72(t); thru Notice 89-25, takes us to IRC Reg. 1.401(a)(9) which is the regulation for minimum required distributions when attaining age 70 1/2. However, Notice 89-25 tells us to look to this regulation and substitiute “SEPP” for “MRD” to learn how to do things. Amongst the issues covered in this regulation are multiple distributions within the same tax year — which are just fine. Another way to interpret this is that the IRS does not care when or how many distributions occur within a tax year as long as the sum of the distributions adds up to correct number.(3) There are a variety of PLRs which admittedly had a different central issue where the timing of distributions within the year was skewed or unusual and was treated as fine.TheBadger2002-07-04 09:28, By: TheBadger, IP: [127.0.0.1]

L2: definitiion of "annual’Actually I have little disagreement about the frequency/timing of the payments. My only concern was with the full payment in the first partial year.While I wouldn’t do it, there are some grounds for the payment plan described. For example, in Arnold v. Comm, Arnold took a payment in 12/89 and again in 1/90, 1/91, etc. The IRS never challenged the payment schedule, although they really didn’t have to since this is the case where the IRS pressed the definition of 5 years and also a COLA issue – they won on both points.It’s really a matter of comfort level and I tend to be more conservative. If there were an audit and the IRS were to object, do you have a busted plan or do you challenge in tax court? And at what cost?Just my thoughts :~}2002-07-04 11:32, By: Gfw, IP: [127.0.0.1]

L2: definitiion of "annual’Badger, you said “taking a full year SEPP in 7/02 followed by a full year’s worth in 1/03; followed by 1/2 year in 1/04 & another 1/2 year’s worth in 10/04; etc. is just fine.” However, for amortization method, you would not know what interest rate and account balance in 7/03 to be able to calculate the withdrawal amount in 01/03. You could play it safe by withdrawing a smaller amount, let’s say, one-quarter, but that’s still a dangerous game to play. No?! 2002-07-09 11:20, By: sonny, IP: [127.0.0.1]