72 T periods

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L1: 72 T periodsRegarding the reply to “72t period” posted earlier, I understand the option of taking the first distribution in 2008 in either pro-rated amounts for the remaining months of 2008 or taking the full annual amount for 2008 in a lump payment. What I”d like to know is if the full annual amount is taken in a lump payment for 2008 is it permissible to change the distribution to monthly increments in 2009 as long as the full annual amount is taken by year end 2009 and the method of calculation is not changed?2008-08-28 20:50, By: AL, IP: []
L2: 72 T periodsDEFINITELY.2008-08-28 21:56, By: dlzallestaxes, IP: []

L2: 72 T periodsAlso note that for 2008, if elect to take the full annual amount, it does not have to be in a lump sum payment. It can be split up over the months that include your first distribution and later months as long as the total equals the full annual amount. This also applies to the pro rated amount if you choose not to take the same amount each month.
It is advisable not to maintain a simple distribution method, such as you originally suggested to reduce the chance of error. However, there are other options as mentioned should you have good reason to use them.2008-08-29 15:25, By: Alan S., IP: []

L2: 72 T periodsTo Alan SI don”t understand your advice to *not* use a simple distribution method – could you please explain?2008-08-29 15:44, By: AL, IP: []

L2: 72 T periodsSorry, typing error. Scratch out the “not”. It IS advisable to keep it simple.2008-08-29 19:06, By: Alan S., IP: []

L2: 72 T periodsThanks to all for the responses to my inquiry. Apparently my research and results are a moot point as I have learned that my brokerage firm will only calculate, validate, and properly mark my 1099-R as a type 2 distribution if I choose a specific distribution frequency and stay with that frequency throughout the 5 yr period. IOW, once I elect to take my 2008 distribution as a full annual amount in Sept, I must take subsequent distributions as *annual* payments in Sept of each year until the final payment Sept 2013, with modification permitted after Dec 31 2013 a few days. Granted, I could start with monthly distributions, but I have a reason for wanting to pull a year”s worth of money in my 2008 distribution.I can see why my brokerage firm chooses to impose this restriction as the exact wording from the IRS creates something of a gray area. My approach is, if the IRS doesn”t prohibit something it”s ok, my investment firm”s position is, if the IRS doesn”t specifically permit it, then it”s not ok. I could choose to ignore my investment firm”s procedures and handle the calcs & annual reporting myself but my fear of the IRS and busting the SEPP is enough to make me play safe.Oh well.AL2008-08-31 12:17, By: AL, IP: []

L2: 72 T periodsMany, if not most, firms are now coding the 5329 as a 1. You will see in many postings on this list-serve that most of us are not bothered by that little inconvenience, so long as we are comfortable with everything else about that company.
There are many mutual funds, brokerage firms, and financial institutions who are more “user-friendly”. I would find one that will do what YOU want to do, and do a trustee-to-trustee transfer.
In addition to your needs for 2008, the needs for 2009 are also important. You could take 4/12 in 2008 if you start in Sept, and a full year in January if that fits your cash flow need, and use any excess to carry you thru the rest of 2009. In 2010 you could use whatever frequency you wanted then. Or you could take ALL of your 2008 ANNUAL amount in 2008, and take it in 2009 at whatever frequency you needed for 2009.
2008-08-31 12:56, By: dlzallestaxes, IP: []

L2: 72 T periodsThe majority of custodians have evolved into refusing to code the 1099R with the exception code. Some still offer it. Your firm has taken an intermediate position of offering the exception code if your plan complies with certain non IRS required restrictions.
Your choice now is to either change custodians or considering all the positives of your current custodian and knowing that what you intend to do is all right if you do not commit an error in execution, to stay the course with them and simply addthe 5329 form to your return to claim the exception as most other SEPP participants are currently doing.2008-08-31 18:32, By: Alan S., IP: []