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.
Live life a little more
- Date of Birth: 6/4/74
- Age: 46
- 72t Method: RMD
- Life table: 37.9
- Stub Year*: 20
- Annual Recalc*:
- AFR* Rate: 1
- Balance(s)* > 1m
Looking to enjoy life now is all, looking to start in July. Read through a lot on here (thanks to everyone), and so want to confirm
I can use June 2020 balance as my starting point.
I prefer monthly, so for the current RMD, this will be just for the next 6 months and then I have to recalculate after Dec.
I can just take monthly distribution for the next 6 months and not have to take a full year distribution for 2020.
You can take distributions in any frequency, and can change for any year. So, you can take your 2020 prorata or full distributions at any time in 2020 depending upon cash flow needs and tax considerations.
No. Whichever method that you use, you are required to take out that amount. The most popular method is the calculation of a FIXED ANNUAL AMOUNT, that is also used for the prorated short first year. The RMD can go up or down, depending upon the value of the SEPP account as of 12/31 of each year.
We usually recommend that you set up an initial SEPP 72-T account only for the amount you think you need NOW for the coming few years. We pro ide a "REVERSE CALCULATOR" to determine the MINIMUM that you should transfer into the SEPP 72-T account. The rest of your IRA account(s) should then be set aside separately, to be used, if needed in future years to either set up another one or more extra SEPP 72-T plans. If at that future time you needed some extra money once, then it would be better to pay the extra 10% on just that distribution from the other SEPP 72-T account. Otherwise you will pay taxes on excess distributions that you may not need, rather than allowing more to grow tax deferred until stopping the plan at 59 1/2.
You have several choices in your example of starting in July -- either a total of $ 12,000 or $ 24,000 for 2020, depending upon your cash needs, timing, and tax situation. If you want/need only $ 12,000 in 2020, then your options are-- 6 mo. @ $ 2,000; 2 payments (July and any other time) @ $ 6,000; 3 payments @ $ 4,000 (July and 3 other times); 4 payments @ $ 3,000 ( July and 3 other times), or 5 payments @ $ 2,400 (July and 4 other times). Make sure to take the last payment 12/15 (not later in case they custodian screws up).
If you want/need $ 24,000 in 2020, as well as all future years, then double these payments, or take all $ 24,000 at any time before 12/15.
If you go to the HOME PAGE, you will see "SEPP DISTRIBUTION CALCULATOR", MINIMUM BALANCE CALCULATOR (i.e. REVERSE CALCULATOR", and "TOOLS & RESOURCES". You might find some or all of the other items on the Home Page to be helpful, like "GET STARTED", "SUGGESTIONS", "Q&A", and I would start there. You might find topics and ideas that you had not considered. I worked with the creator to develop these, and they are being continually updated based upon tax developments and questions.
It has taken considerable time for the creator of this website (not me) to develop all of these items, and I see no reason for you to reinvent the wheel.
I did start my plan in July using June's balance and set up monthly distributions. So I have taken 1/2 of a yearly distribution. Going back a couple answers ago, I should be fine. But as long as I do it by the 15th, I also have the option of taking out another 1/2 yearly distribution even though I started mid year?
Dec 15 is just a CYA approach in case the financial institution screws up you will have time to hopefully get it corrected before 12/31 of any year, but especially the first year. The first and last year always depend upon your tax situation for that year.
If you have separated your IRAs into ones as part of your "SEPP 72-T UNIVERSE" and other IRA accounts, then you COULD start a 2nd SEPP 72-T using the other IRAs if you will need additional cash flow until you are 59 1/2. But if it is a one-time need, and you are in the 12% or lower tax bracket, then you COULD take some additional distributions from the OTHER IRAs, but you will be subject to the 10% EARLY DISTRIBUTION PENALTY -- unless you could qualify under any of the other EXCEPTIONS (which are listed elsewhere on this website, I think under "TOOLS & RESOURCES" at the top). We try to provide other meaningful information, and you will note at the top we have separate links for the 2020 CARES ACT and the 2022 CHANGES that the IRS just announced, which will reduced the required distributions even from SEPP 72-T plans which were excluded from eligibility under the CARES ACT.
That was my response several times above.
Thanks for your replies and patience.