Another 72(t) ending question.

L1: Another 72(t) ending question.
Properly ending 72(t)? After reading several posts I’m still unsure of the correct way to end my 72(t) distribution. Here are my details DOB 7/7/51, Turned 59.5 1/7/2011, First distribution by fixed amortization method 1/30/07 then monthly around the
15th of each month, Changed to RMD method 2009 with qtrly draws -3/1-6/1-9/1-12/1, First modification date 1/30/12. My question is this what are my distribution options from 1/1/12 to 1/29/12. Again from the posts my Form 1099-R, Block 7 distrubition
code is 2 is that wrong?
Thank you.
2011-11-29 17:54, By: Carol from Idaho, IP: [71.221.133.246]

L2: Another 72(t) ending question.
As of the end of 2011, you have distributed 60 months of72t distributions. Your best choice is to take out nothing in January, 2012.
Your 1099R coding is correct, as you have one of the few IRA custodians who recognizes your plan and provides the exception coding. Of course, you don’t have the 2011 1099R yet. When you get it there is nothing you need to do
if it is coded either 2 or 7. If it is coded 1, then you will need to attach a 5329 to change the 1 to “02”.
There is some debate whether you have other options for January prior to the ending of your plan, ie other than taking out nothing. Two possibilities are taking out your full annual distribution or 1/12 of your annual distribution.
But for a 30 day period, I would not take the chance. After 1/30/2012 your plan is over and you can take out as little or as much as you wish.
2011-11-30 02:13, By: Alan S., IP: [24.116.66.40]

L3: Another 72(t) ending question.
Alan, Thank you very much for your reply – good news.
I have Wells Fargo asmy IRAcustodian with a financial advisor assigned to me from Santa Rosa, CA.
Your remark about the 2011 1099-R raises another issue – I cashed out an IRA not associated with my SEPP IRA after reaching 59.5. I should ask my custodian for a 1099-R for each distrubition and see how they respond.
Thanks again.
2011-11-30 03:12, By: Carol from Idaho, IP: [71.221.133.246]

L4: Another 72(t) ending question.
You should contact your tax preparer, if you have one or may need to retain one, to do your tax planning during December for 2011 to take into account this income, and any related estimated payments that may be required.
2011-11-30 03:45, By: dlzallestaxes, IP: [96.227.217.194]

L5: Another 72(t) ending question.
dlzallestaxes – Thank you for the heads up. Based on a “Dummy” 1040 I had state and fed taxes withheld from my non SEPP as well as my SEPP accounts. However, you are correctand I will probably seek the advice of a pro. tax preparer.
2011-11-30 04:18, By: Carol from Idaho, IP: [71.221.133.246]

L4: Another 72(t) ending question.
With respect to the other non SEPP IRA distribution, the custodians will combine all distributions for each separate IRA accountin the same calendar year on a single 1099R unless the coding is different. For that other IRA,
the 1099R should be coded 7 (normal distribution after 59.5). That means no early distribution penalty.
Note: If you ever made non deductible contributions to any traditional IRA, you would be filing an 8606 to report not only your SEPP distributions, but the other IRA distributions as well. Some of those distributions would be
tax free. For example if 10% of your distributions were not taxable, the % would be the same each year for your SEPP distributions as for the non SEPP distributions. Form 8606 would combine the two accounts as if they were combined, although for penalty purposes
the SEPP is treated separately. You will also have a combined taxable amount showing on line 15b of Form 1040 and a combined gross amount on line 15a.
2011-11-30 03:46, By: Alan S., IP: [24.116.66.40]

L5: Another 72(t) ending question.
Alan, based on your first statement I should expect to receive two 1099-R forms – one with a dist. code of 7 for the non SEPP IRA and one with a dist. code of 2 for the SEPP IRA; however, I should make sure my custodian is very clear on this issue. I don’t
want to raise any “flags” with the IRS due to a wrong 1099-R form.
Thanks again.
2011-11-30 04:24, By: Carol from Idaho, IP: [71.221.133.246]

L5: Another 72(t) ending question.
Alan S:
With respect to your first sentence …
“With respect to the other non SEPP IRA distribution, the custodians will combine all distributions for each separate IRA accountin the same calendar year on a single 1099R unless the coding is different.”
I believe there is another “discriminator” to determine what generatesa 1099-R and that is different account numbers and notjust coding.
If Carol made a distribution from her non-SEPP IRA after age 59.5 (Code 7), and her regular SEPP distribution after 59.5 (Code 7), and her regular SEPP distribution BEFORE age 59.5 (Code 1 or 2)in the same year, she should receive
three (3) separate 1099-R’s for these different situations.
As I have stated previously, in the past I haven’t seen a lot of my clients’ Form 1099-R’s, but from my personal situation, I have seen what I described above. I should begin seeing more of my clients’ forms now that I am adding
tax preparation to my practice.
Comments?
Jim F
2011-11-30 14:58, By: Jim F, IP: [70.167.81.119]

L6: Another 72(t) ending question.
Jim,
I think we are saying the same thing. Note that the highlighted statement indicates “for each separate IRA account”, for which a 1099R would be generated. I agree with the 3 forms in your example.
2011-11-30 20:17, By: Alan S., IP: [24.116.66.40]

L7: Another 72(t) ending question.
Good afternoon, Alan:
The way I read your post was that if someone had 3 separate IRA’s with separate account numbers at one custodian and took distributions from each IRA in the same year with the same distribution code, then the custodian would add up all distributions and
issue one Form 1099-R for the total distribution amount from all of the IRA’s rather than issuing 3 separate Form 1099-R’s.
I guess I missed what you were saying.
Jim F
2011-11-30 20:33, By: Jim F, IP: [70.167.81.119]