L1: additional distributionsI am considering beginning a SEPP from my IRA. Once I choose my distribution method and begin taking distributions can I take additional distributions (I know I would have to pay the 10% penalty) or would that cause me to have to pay a 10% penalty on the SEPP distributions I have taken? I am concerned that the SEPP distributions would not cover my monthly expenses if an emergency arises. I am 52 and have not begun any distributions.2016-09-27 20:28, By: PFitz, IP: [18.104.22.168]
L2: additional distributions>>I am concerned that the SEPP distributions would not cover my monthly expenses if an emergency arises.
Any additional distributions would result in ALL previous SEPP distributions being subject to the 10% penalty tax.
Based on your post, you may not be a great candidate for a SEPP. At the very least, divide up you IRA into 2 accounts: 1) SEPP IRA; and 2) IRA for Emergencies. If the SEPP IRA doesn’t generate sufficient income based on what you need, you shouldn’t start a SEPP.
2016-09-27 22:01, By: Gfw, IP: [22.214.171.124]
L3: additional distributionsIf it will not put you into a higher tax bracket for 2016 than 2017, consider taking the full 100% of your annual distribution in 2016, and keep the excess 75% over the prorata amount from 2016 as your buffer until hopefully you can get to 59 1/2.
This way you would have the same 25% tax regardless, and minimize the need for busting your SEPP until then. Maybe set aside $ 10,000 just in case to use during that period.2016-09-27 23:13, By: dlzallestaxes, IP: [126.96.36.199]
L3: additional distributionsThanks for the answer!2016-09-28 11:20, By: Pfitz, IP: [188.8.131.52]
L3: additional distributionsThank you very much.2016-09-28 11:22, By: pfitz, IP: [184.108.40.206]