Account balance

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L1: Account balanceNew SEPP
DOB 7-1-1960
Date of first distribution: 11-15-2015
“To comply with RR 2002-62, the initial valuation date should probably be the December 31 of the prior year, or on a date within a reasonable period before that year’s distribution.”
I want to maximize my SEPP distribution amount. With the latest market peaks and valleys, what date should I use to determine the account balance I enter into the calculator?
A. 12/31/2014? (~ $1,021,000)
B. 11/1/2015? (~ $1,018,000)
C. 7/1/2015? (~ $1, 027,000)
D. Some other date
2015-11-09 04:11, By: ckjohnson99, IP: []

L2: Account balanceI would pick a date that most reasonably represents the actual value when the plan is implemented, even if that date is 10/31/2015.
Just make sure that you keep a statement that shows the value that you choose to use.2015-11-09 10:38, By: Gfw, IP: []

L3: Account balanceI think 12/31/2014 is too long ago.
Since 10/31/2015 and 6/30/2015 are about the same balance, I would use 10/31/2015 because it is closer to the date you will start taking distributions.2015-11-09 16:30, By: DLZALLESTAXES, IP: []

L2: Account balanceOK, so I am going to use the 10/31/2015 account balance. I’ve done the calculations, used the proper interest rate and documented everything in writing and saved it with our tax forms history.
I spoke with our investment firm and they tell me I simply sell assets in the IRA and then transfer the proceeds from the Cash account to my personal checking account. When that happens, I’ll be prompted about income tax withholding.
I’ve spoken with our tax professional and the only additional thing he suggested was to have income tax withheld from the withdrawal. Then provide him with the 1099-R I will get from the investment firm and we’ll be all set.
Am I missing anything? Do I have to file any “special SEPP” document with the IRS? Or is it just this easy?
PS Maybe I’m a bit anxious because I’ve always only contributed, never withdrawn from an IRA before.2015-11-10 16:58, By: ckjohnson99, IP: []

L3: Account balanceI would check with your tax professional now to determine :
1. Should you take the pro-rated distribution or 100% of the annual distribution for 2015, depending upon your tax situation for 2015, and your cash needs for 2015 and 2016 (and possibly 2017) ?
2. What will be your tax bracket for 2015 considering your answer to #1, so you can tell your investment firm ?
3. Similarly, what will be your tax bracket for 2016, so you can have the correct wihholdings for Jan. ?
Separately, have you set aside part of your IRA into a separate account for future emergencies, so yo won’t have to bust your plan if you need more money before you are 59 1/2 ?2015-11-10 17:29, By: dlzallestaxes, IP: []

L4: Account balance1. Pro-rated or 100%? We’ve been over retirement planning with our financial adviser and decided 100% for first year.
2-3. Our situation will be a bit unique in that we are planning early retirement but almost all our savings are in tax deferred accounts. Next year will also be unique in that we will receive a large chunk of tax credits (unrelated to SEPP) and will actually require a larger tax liability to take full advantage. We’ve talked all this over with our tax adviser.
4. Set aside for emergencies? Yes, that’s already been done.
Is this a great forum or what?2015-11-10 17:41, By: ckjohnson99, IP: []

L5: Account balanceFor 2016 in order to take advantage of lower marginal rates, if you have partitioned off an IRA account outside of your SEPP plan, you could convert some of that account to a Roth IRA. However, be aware that if you need some of converted money before 5 years or age 59.5, the 10% penalty would apply.
Also, since you will paying income tax by withholding rather than quarterly estimates, note that you do not have to have the withholding taken from each SEPP distribution, you could have it all taken from the last distribution if you wish. But you always need to be careful with withholdings from a SEPP distribution to make sure the communications are clear. Your gross distribution does not change, just the net.
Finally, no special forms are needed for filing with the IRS other than Form 5329 to claim the SEPP exception code 02 if your 1099R is issued with Code 1 in Box 7 as expected.2015-11-11 00:08, By: Alan S, IP: []