Age for starting 72t
L1: Age for starting 72tI am starting my SEPP June 1st. I am 56 now but turn 57 in November.Do I use 56 or 57 for the age.I plan to take monthly distributions.I assume starting in June and ending in june will cause no IRS problems.Also I had one day in mid January where my account balance was higher than 12/31/08.I asume I still have to use 12/31/08 or if April 30 was higher can I use that?
2009-05-01 12:29, By: Les, IP: [220.127.116.11]
L2: Age for starting 72tLes,
Use the age you will be at end of 2009 for a plan starting anytime in 2009, so age 57 for the calcs to start the plan. I think youcan use either the 4/30/09 total as the plan starting balance for a plan that begins in June 2009, or you could usethe 12/31/08 balance which is still reasonable starting point(only 6 months ago) when your plan starts in June, but let’s see what others have to say.
I just looked, and there areanswers to these questions in the FAQ section of this site- check it out. KEN
http://www.72t.net/Sepp/Irc72tFAQ.aspx2009-05-01 14:56, By: Ken, IP: [18.104.22.168]
L2: Age for starting 72tPlease wait for the experts knowledge here, but in the meantime consider this.
Depending on your previous employment circumstances, and the fact that your age is already greater than 55, you MAY not have to setup a SEPP to avoid the 10% penalty. If so, you can make draws as you want and pay ordinary taxes on the amount you withdraw, w/o the penalty. I would not do a SEPP if not required as it restricts your responses to any future financial events.
As I said, wait for the experts to respond.2009-05-04 01:25, By: Larry, IP: [22.214.171.124]
L3: Age for starting 72tFar too many unknowns to make any conclusions.
Separation from service must have occurred at (or after) age 55. In addition, the assets need to still be in an employer plan and the employer plan needs to allow for partial distributions – some 401(k) plans do and some don’t.2009-05-04 01:38, By: Gfw, IP: [126.96.36.199]
L4: Age for starting 72tExactly!!!
I was merely opening the possibilty that the SEPP might not be required. Hopefully the OP will reply with more information.2009-05-04 01:55, By: Larry, IP: [188.8.131.52]
L4: Age for starting 72tRe: “Separation from service must have occurred at (or after) age 55.”
My reading on this is that separation from service and attaining age 55 must occur in the same year, if partial 401k distributions are to be taken that are free of penalty. As was noted, the 401k plan document decides whether or not this is available.2009-05-07 04:11, By: Ed_B, IP: [184.108.40.206]
L5: Age for starting 72tI don’t know that Ed’s post came out the way he intended it, but the separation from service can come in the same year or after the year the employee turns 55. The penalty exception is not limited to distributions taken in the year 55 is attained, and is allowed for distributions taken in later years as long as the separation did not occur prior to the year of reaching 55.
The penalty exception is an IRS provision in Sec 72(t). However, the plan provisions control whether partial distributions are allowed or not. In most cases, if the plan requires a lump sum distribution, the benefit of the penalty exception is offset by the accumulation of taxable income in a single year that will often increase the marginal federal and state tax rate.2009-05-07 04:35, By: Alan S., IP: [220.127.116.11]
L6: Age for starting 72tYes, Alan, it did. My point was specifically aimed at when someone turns 55 vs. when they can take separation from service payments and not anything to do with the duration of those payments. Some folks here say that my posts are “too wordy”, so… the 1st time they are not… Oh, well.
2009-05-07 05:19, By: Ed_B, IP: [18.104.22.168]
L3: Age for starting 72tLarry and GFW responded as if you have a 401-k or other employer retirement plan where the age 55 and sedparation from service are applicable.
If you are talking about an IRA, then age 59 1/2 is the age when the 10% penalty no longer applies. However, if you start a SEPP before then, you have to continue the SEPP for 5 years ( 60 months) or until age 59 1/2 if you start the SEPP before age 54 1/2.2009-05-04 14:18, By: dlzallestaxes, IP: [22.214.171.124]