72T / SEPP

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L1: 72T / SEPPWhen separated from your employer earlier than age 55, is it safe to begin receiving SEPPpayments from an IRA?I am a few months short of 55 and my employment is terminating next month.Should I wait until 55 to roll over my lump sum pension to an IRA if I am planning to receive SEPP?2010-02-07 03:29, By: PMM, IP: []
L2: 72T / SEPPI think the experts that post on this site will tell you that as long as you retire at least in the same calendar year that you turn 55.. even if you leave during that yearbefore that 55th birthday, as long as the birthdayoccurs before the end of that same year, you will beable to takeout payments without penalty from your401K. You may have to attain age 55 before taking any payments out, etc., but they shd be able to clarify that, and the Summary Plan Description (SPD) for your 401Kplan should also be reviewed for the specific policies regarding withdrawals, etc. Wait for others more knowledgeable than meto confirm that, but I think that is what I have read on this site. The other hitch is that your employer may not offer flexible enough withdrawals to meet your needs, but you can look into that in advance by readingyour employer’s 401K SPD. Once you roll over the 401k to an IRA, then you lose that ability, and must use a SEPP plan with a minimum of 5 years of “substantially equal” payments to avoid the 10% withdrawal penalty while under 59 1/2. Ken2010-02-07 05:32, By: Ken, IP: []

L2: 72T / SEPPFor the definition of age 55, IRC Notice 87-13 states… “such separation from service occurred during or after the calendar year in which the employee attained age 55.”The age 55 rule only applies to distributions made from the employer’s plan. Start by talking to your employer or as Ken stated, look inplan’s Summary Plan Description. If your employer allows you to leave the funds in the 401(k) and take partial distributions, you don’t need a SEPP to avoid the 10% penalty. If you roll the funds over to an IRA, the age 55 exemption will be lost, and then you do need a SEPP to takeperiodic distributions and avoid the 10% penalty.2010-02-07 10:51, By: Gfw, IP: []