Annual vs Monthly Distributions

L1: Annual vs Monthly DistributionsHi Everyone–I’ve searched the forums here (and some other places) and am still confused about how to calculate the actual payment amount.
The tl;dr version is: most of the advice I read says to calculate the annual payment and then take the distributions however I want as long as I take the amount out for that year. However, the IRS FAQ seems to say to set a strict payment schedule for the amortization option. Which is more correct?
Here’s the IRS FAQ (sorry, links not allowed)
Can I take my substantially equal payments on a monthly basis?
The simple answer is yes. Your monthly payment under the required minimum distribution method would be the calculated annual amount divided by 12. Under the amortization and annuity methods, the choice of a having the payment made monthly should be part of the original calculation.
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This makes it sounds like I should be using the the PMT function in Excel (or play withPV = PMT [(1 – (1 / (1 + r)^n)) / r]) version) with the number of periods set to number of payments I anticipate per year, and that it cannot be changed.
For example, if I want monthly distributions, I would use
monthlyPeriodPayment = PMT(rate/12, LifeExpectancy*12, IraBalance)
For annual, which is what the calculator here uses, the form would be
annualPeriodPayment = PMT(rate, LifeExpectancy, IraBalance)
The discrepancy I’m seeing is that the typical advice seems to be that for monthly payments I can just do annualPeriodPayment/12; however, that is a different answer from monthlyPeriodPayment.
To make this more concrete, let’s assume:
rate = 1.47%
Life Expectancy = 31.4 (Single Life Expectancy for a 53 year old, )
IRA Balance = $375,000.00
For monthly payments of an annuity, we get
monthlyPeriodPayment = $1,243.12 (*12 gives $14,917.40 for a full year)
annualPeriodPayment = $14,996.25
First payment 2016-10-01 (to make sure the rate is still valid. I’m not really thinking I can get this sorted in such a short time!)
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So, which is more right? It sounds like the IRS is wanting to be more strict on the payment schedule. OTOH, as people point out, they only get one 1099-R per year. Am I reading too much into the FAQ?
Thanks,
David2016-09-17 05:15, By: respond2you, IP: [99.7.233.59]

L2: Annual vs Monthly DistributionsThe annual payment is the annual payment – take it anytime and in any manor sometime between January 1 and December 31. Take no more than the annual payment and no less than the annual payment. If you want monthly payments, divide the annual payment by 12 .
You appear to be over complicating.2016-09-17 09:32, By: Gfw, IP: [205.178.65.222]

L3: Annual vs Monthly DistributionsThanks GFW–the IRS FAQ response scared me…2016-09-17 18:35, By: respond2you, IP: [99.7.233.59]

L4: Annual vs Monthly DistributionsFor the FIRST calendar year, you have an option of taking EITHER the prorata amount for the months left in the year, OR the FULL ANNUAL AMOUNT, between now and 12/31. So, if the annual amount is $ 12,000 you can take the $ 12,000 (even if you started in Dec), or $3,000/month in Sept-Dec, or $ 4,000/mo if you didn’t start until October.
Regardless what you do in 2016, you can change in 2017 as far as frequency and amounts of each distribution, so long as you take EXACTLY the $ 12,000 ANNUAL AMOUNT in 2017 and every year thereafter until the plan ends (i.e. 60 months or 59 1/2, whichever is later).
You should do tax planning and cash flow needs to determine how much to take in 2016. Also, if possible, you should set aside some amount in a separate non-SEPP IRA in case there is a future emergency need. This way you can minimize the possibility of busting your plan, which would result in a 10% penalty on all of the cumulative distributions taken from the beginning.
If the tax difference is not too great, it is often better to take the full ANNUAL AMOUNT in 2016 even this late in the year so as to provide you with some buffer for 2017 and future years.2016-09-17 19:07, By: dlzallestaxes, IP: [108.36.116.44]