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A little help…

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Last Updated On
ByReg

L1: A little help…
I’ve mentioned before that I plan to begin taking SEPP’s this January, when I will turn 55 years of age. Suppose 6-8 months into my plan I decide that retirement isn’t for me, or I find a job that I genuinely enjoy. What’s to prevent me from stopping Vanguard from sending my payments (at that point) and simply paying the 10% penalty on what I did receive from my IRA, when I do my 2008 taxes in early 2009? If I understand correctly, this option is open to me until I file my FIRST form 5329, after that, of course, I am committed to the full five-year plan. Right? Wrong? 2007-11-20 07:44, By: Reg, IP: [216.80.125.206]

L2: A little help…Right and Wrong.
Right – you can bust the plan and pay the penalties (and any back interest due)at any time.
Wrong -you are only locked in for 5 yearsas long as you choose not to bust the plan.
Or… you could also chose to switch to the Minimum Distribution method rather than busting the plan.2007-11-20 07:57, By: Gfw, IP: [216.80.125.206]

L2: A little help…If you land a job, stop the monthly distribution immediately. That will give you a while to determine if the job will stick. Come December, you will have the option to:
1) Make up the rest of the year”s total if you wish to continue the plan
2) Make up the amount needed to make the one time switch to RMD method if you wish to continue the plan with a reduced annual payment.
3) Bust the plan and have fewer dollars subject to penalty having stopped the monthlies earlier.2007-11-20 14:07, By: Alan S., IP: [24.116.165.60]

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