Age 59.5 and SEPP Termination

You are here:
  • KB Home
  • Age 59.5 and SEPP Termination
< Back

L1: Age 59.5 and SEPP TerminationI will be age 59.5 on
11/24/2010. I will have
also be in the 7th year of my SEPP plan. I have used annual recalculation
each year.

My question is since I will turn age 59.5 in 2010 do I still need to do
annual recalculation based on the 11/24/2010
termination date. In other words take out 11.75 months worth of payments? Or
should I just take out the full 12 months and then terminate the SEPP. Also can
I withdraw any amount I wish after 11/24/2010
without any penalty or SEPP rule violation.

Joe 2009-07-25 06:56, By: Joe, IP: []

L2: Age 59.5 and SEPP TerminationYou can take out any amount you wish AFTER 11/24/2010, but reporting will be easier if you wait until 2011.
Prior to 11/24, since you are in your final stub year and have already taken out over 60 months of SEPP distributions, you have several choices for 2010 prior to 11/24:
1) Do the last re calc and take out the full annual amount
2) Do the last re calc and take out 10/12 of that amount (.833 X annual amount). Do NOT pro rate to the day or count November which is the month the plan ends. Use .833 of the annual if you want the pro rated amount.
3) Avoid the re calc and do NOT take a distribution. This would be useful if you do not need funds and wish to preserve IRA assets.
The plan terminates automatically at 59.5 in your case. All you have to do is correctly report any distributions in 2010 on your return including a 5329 if your custodian does not provide the exception coding.
2009-07-25 17:59, By: Alan S., IP: []