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Partial Year Payment possible?


chel
Posts: 5
 chel
Topic starter
(@chel)
Trusted Member
Joined: 2 years ago
  • Date of Birth:9/1/62
  • Age:59
  • Single/Married-single
  • Annual cash needed year 1 (after taxes):none after next year until 67
  • Annual cash needed later years (after taxes): 40k
  • How are you planning on paying taxes? (withholding or quarterly estimates):working ft again -withheld
  • 72t Calculation Method: Amortization method
  • 72t Distribution Start Date:3/29/18
  • *Life Table Used:distribution  factor 19.596
  • Stub Year (Y/N):?   Started plan March 29, 2018- Ending March 2023
  • Annual Recalc (Y/N):N
  • *Interest Rate:2.78
  • *72t Account Balance(s) with account type (traditional IRA, Roth, SEP-IRA, SIMPLE-IRA, 401k, 403b, etc.):798,905.31
  • Describe other assets if applicable (taxable, Roth, other income, etc.) and how much is in each account.80k other IRA, 40k cash own home -no mortgage current income 65k.

 

Hi,

Based on guidance from this site, I noted that my first modification date is 3/30/23.  I have been taking $40,768.07 every year since I started this plan.  My question is ...Can I take a 1/4 payment for 2023 since it is only January -March 3/3023 and plan ends 3/3023?  I am working full time again and do not need the funds.  

 

Thank you in advance for the guidance. 

 

 

*For these items see new guidance as of January 18,2022 in IRS Notice 2022-6.

6 Replies
dlzallestaxes@msn.com
Posts: 176
(@dlzallestaxesmsn-com)
Illustrious Member
Joined: 3 years ago

I think it depends how you have been taking your distributions, as well as for 2022 and 2023. Many people confuse the requirements. You must take the distributions for the equivalent of 60 months/5 years worth, regardless what frequency you use, and you cannot terminate your plan until the later of 60 months or age 59 1/2. You did not indicate how much you took in 2018 when you started the plan, or your frequency.

Let me explain the significance. If you took an ANNUAL DISTRIBUTION in March 2018, 2019, 2020, 2021, and 2022, you would have satisfied the "5 years' worth" requirement, but you would have only been in the plan for 49 months in March 2022. That is why the website shows your "modification date" as March 2023. However, if you have been taking your distributions on a monthly, quarterly, or semi-annual basis, then you will need to take the last "installment" before your plan ends in March 2023. If you take the last 3 months' worth in Jan-Mar, 2023. You will not have to take a full calendar year in 2023.

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chel
Posts: 5
 chel
Topic starter
(@chel)
Trusted Member
Joined: 2 years ago

I have taken annual distributions in March 2018, 2019, 2020 2021 and 2022.  So, with that in mind, just to confirm, I can take 1/4 of the annual amount to satisfy my plan requirement in 2023?  Thank you!!

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1 Reply
dlzallestaxes@msn.com
(@dlzallestaxesmsn-com)
Joined: 3 years ago

Illustrious Member
Posts: 176

You don't even have to take 1/4 in Jan-Mar 2023 if you don't want to since you took a full distribution in March 2018.

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chel
Posts: 5
 chel
Topic starter
(@chel)
Trusted Member
Joined: 2 years ago

To clarify, I would rather NOT take any further distributions but I don't want to bust my plan!

 

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1 Reply
dlzallestaxes@msn.com
(@dlzallestaxesmsn-com)
Joined: 3 years ago

Illustrious Member
Posts: 176

You don't have to take any more distributions in 2023. Your plan ends in March 2023, and you can do whatever you want after then. It will become a tax decision after that date re future distributions from your IRA.

 

By the way. since you are working again, you should consider making a 401-K/403-B CONTRIBUTION of $27,000 to your new plan, which is usually after a 60-day waiting period. Your "target" will be GROSS INCOME in 2022 of $ 53,000, which will be $ 40,000 in taxable income after the $ 13,000 STANDARD DEDUCTION, or higher if your ITEMIZED DEDUCTIONS will exceed $ 13,000. Obviously, this depends upon your 2022 salary. If it is "modest" for 2022, and your RETIREMENT PLAN CONTRIBUTION brings you to a TAXABLE INCOME below $ 40,000, then you should consider doing a ROTH CONVERSION for an amount that would bring your GRISS INCOME close to $53,000. You might consider discussing this with a Tax or Financial Planning professional.

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chel
Posts: 5
 chel
Topic starter
(@chel)
Trusted Member
Joined: 2 years ago

Great!!! Thanks.  

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