Can I include current 401k plan in SEPP?

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L1: Can I include current 401k plan in SEPP?This web site is a great resource and I appreciate everyone’s input! I am 54 _ this month (birth: 12/xx/58) and planning to retire this next year (reducing to 60% in October and full retirement at the end of March 2014). My wife, who turns 50 in October (birth: 10/xx/63), wants to continue to work for the next ten years. I want to set up a 72t SEPP plan to bridge the five years to 59 1/2.
We have put together a five year budget to meet our annual needs and ensure there is enough money to access if necessary and not break the plan. The budget will require that we use my wife’s salary, the SEPP and also draw from other non-SEPP accounts (some Roth and taxable accounts). I have calculated the SEPP distribution using single life expectancy and the Amortization Method.
To help meet my five year budget, I assume that I have to begin the SEPP plan this July or August (yes, I’m a procrastinator) to bank this year’s distribution for use over the five years (along with the non-SEPP accounts).
I have a several questions:

I have several IRA accounts that I will identify in the 72t SEPP. I also have a 401k plan with my current employer. Am I able to include the 401k account in my SEPP plan (and the amount for the distribution calculation) or do I have to set up another separate SEPP once I leave my employer?
Am I able to include my wife’s IRA in the plan and distribution calculation?
I’m not clear on how a partial distribution works. If I choose to take a partial distribution this year, is the remainder portion tacked onto the end of the last year? If so, how is this documented for the IRS?
Am I able to switch to the RMD method during the five years? (I’ve seen posts elsewhere that say you can do a one-time switch to the RMD method within the five years of the plan.)
My accounts reached their highs in May of this year. Can I use May for the account valuation?

Again, thank you in advance for your input and advice.
Mike2013-06-17 20:39, By: Mike, IP: [199.47.177.164]

L2: Can I include current 401k plan in SEPP?1. You are 55 this year. Talk to your employer and see if they allow partial withdrawals. If yes, the SEPP may not be necessary.
2. No.
3. In year 1, you can take 100% or pro-rata amount based on the effective date/month.
4. Yes,. But if you are already talking about reducing the SEPP, maybe you should be look at other alternatives.
5.You can use the May value is it is a reasonable representation of the account value on the date of the 1st distribution. If more than a 5% variance, I wouldn’t.2013-06-17 22:38, By: Gfw, IP: [205.178.67.189]

L3: Can I include current 401k plan in SEPP?As GFW said, if #1 applies, then forget about everything else.
However, before even considering # 1 or SEPP 72-T, as k your plan administrator if there is company stock in your 401-K. If so, ask for the cost basis, and get information about the NUA provision of the IRS tax code. You could save thousands of taxes.2013-06-18 01:11, By: dlzallestaxes, IP: [72.94.41.159]

L3: Can I include current 401k plan in SEPP?As GFW said, if #1 applies, then forget about everything else.
However, before even considering # 1 or SEPP 72-T, as k your plan administrator if there is company stock in your 401-K. If so, ask for the cost basis, and get information about the NUA provision of the IRS tax code. You could save thousands of taxes.2013-06-18 01:11, By: dlzallestaxes, IP: [72.94.41.159]

L4: Can I include current 401k plan in SEPP?Thanks dlzallestaxes. I’ll look into the NUA provision. Unfortunately, they just reduced our ability to withdraw from the ESOP because too many have been cashing in their shares. (The company is privately held and the company value has been shrinking.)2013-06-18 05:32, By: Mike, IP: [99.178.117.70]

L3: Can I include current 401k plan in SEPP?Thanks Gfw for the reply. On #1, I only have about two years worth of savings in my current 401k plus some company stock in ESOP that is frozen. My other IRAs are larger to draw from. So my original question stands. But, you raise a good point. Would it be better to leave the 401k account separate and use it to supplement the SEPP? If I leave the company, am I still able from do partial withdrawals from the 401k Without the 10% penalty?
On #3, so if I choose the pro rata, only the four subsequent years are at the equal distribution amount? I’m sorry if I’m not thinking clearly.
On #4, I would only switch to RMD if that somehow generated a higher distribution.
Mike2013-06-18 05:23, By: Mike, IP: [99.178.117.70]

L4: Can I include current 401k plan in SEPP?#4 — RMD can only be used to REDUCE the annual distribution, not to increase it.
# 3 — Yes
# 1 — Yes, leave 401-K separate, if company plan allows partial distributions. HOWEVER, you must leave the company in order to use this provision. You cannot use it if you stay with the company.
SInce you have only a couple of years of contributions to the 401-K, and the value of the stock has been declining, then NUA will probably not be of any benefit.
If you want the flexibility to increase cash flow, you should consider keeping your IRA’s in 3 separate accounts, so that you can start them in 3 different years, and take full 12 month distributions even if you start each plan later each year. Also, you can take some money in an emergency, and only that distribution will be subject to the 10% penalty. Otherwise, if you need to take extra money in any year before the later of 59 1/2 or 5 years, then all of your cumulative distributions will be subject to the 10% penalty.
2013-06-18 14:35, By: dlzallestaxes, IP: [72.94.41.159]

L5: Can I include current 401k plan in SEPP?Thanks dlzallestaxes for the advice! That gives me some options to consider.2013-06-19 00:19, By: Mike, IP: [99.178.117.70]

L6: Can I include current 401k plan in SEPP?Let me expand onwhy you do not want to include your current employer 401(k) in your SEPP Universe.
1. The SEPP Plan Universe MUST be static … no new money going in and only SEPP distributions going out. Since your current employer will be making regular deposits into your K-plan, you would bust the SEPP with the first monthly deposit. Bad way to run the railroad.
2. Your employer is required to withhold 20% Federal Taxes on each distribution from the K-plan to you. That’s why you would want to rollover the K-plan using the”trustee-to-trustee” methodinto an IRA before starting the SEPP Plan distributions. You may choose to withhold for taxes between 0% and usually 100%, less $1, depending on your IRA custodian rules. Since everyone’s tax situation is different you want to control withholding options and not be constrained by Federal law.
Jim F2013-06-19 13:55, By: Jim F, IP: [70.184.1.22]