This forum is provided for informational purposes and it not intended to be relied upon as a source of investment, tax or legal advice. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of the 72tNET.com owners, or the sponsors or firms affiliated with the author(s). Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Please read our Forum Rules.
Refer to this template when submitting a new post https://72tnet.com/forum-template/. See the Tools and Resources menu for Distribution, Minimum Balance and First Modification Date calculators, current AFR rates, and other resources.
Edit your subscriptions by clicking on this link https://72tnet.com/community/subscriptions/ .
PLEASE NOTE: To avoid confusion, please do not add your question to someone else’s thread. If you have a question, please create your own post.
Annual to monthly withdrawal / partial year
I plan to retire this year and would like to understand if I can take an annual withdrawal this year in July and then convert to monthly in January 2021? Also, regarding this year's withdrawal, do I have to pro rate it, or can I take the entire year's allowable amount? Thanks!!
PS. no covid exception applies to my situation to allow withdrawal
Yes, you have various options. First, you can take either the full annual distribution, or you can take a prorated amount based upon the month you start. ( July would be 6/12 = 50%).
Second, you can change the frequency of your distributions every year, or even within any year, but must take the exact same total amount each year, other than the first or last year.
Third, the COVID exceptions do not apply to SEPP 72-T plans, if you already had one. I agree that you cannot use that exception for under 59 1/2 if you were not affected by the pandemic.
Fourth, going back to the annual vs. prorated aspect, that should be a combination of a cash needs approach and a taxable income/tax bracket consideration for you to discuss with a tax professional to do a 2020 projection.