Can I stop my SEPP payments after 5 years with no penalties?

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L1: Can I stop my SEPP payments after 5 years with no penalties?
I established SEPP payments onseveral of my IRAs five years ago. I have taken the five mandatory withdrawals through 2008 and planned to stop the SEPP withdrawals in 2009 after 60 months on each SEPP plan. In talking with a tax advisor last week, he mentioned that SEPP payments are for the “life of the taxpayer” – not for the five years I had assumed. I recently readSection 72(t)(2)(A)(iv) which seems to state that “…distributions are part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the employee…” Has the law changed so that the five year rule no longer applies and that SEPP withdrawals can not be terminated after 5 years without penalties? Thanks.2009-01-10 00:44, By: Poor, IP: []

L2: Can I stop my SEPP payments after 5 years with no penalties?Actually… the rule has never been 5 years. It has been, and is, the later of 5 years or age 59 1/2. You don’t indicateyour age, but check our last payment date calculator and it will tell you when the plan can end.Optionally, you could provide additional details (date of 1st distribution, date of birth, etc) andyou might get better answers.2009-01-10 02:13, By: Gfw, IP: []

L3: Can I stop my SEPP payments after 5 years with no penalties?There is some confusion on this point. When a 72t plan is started, the amount of the payments is calculated by one of 3 IRS approved methods. While these methods differ, their goal is essentially the same: to take the money in the IRA (or IRAs) and convert it into a stream of regular payments. These calculations take the 72t plan owner’s life expectancy into account when the calculations are made. It is this part that might make some believe that the payments are for life. As GFW states, however, these payments need only run for the longer of 5 years OR age 59.5. I started my 72t at age 55.5, for example,so cannot end the plan until age 60.5 since that will be the longer of 5 years or age 59.5. While I will be 59.5 on 2/6/09, the plan runs until 3/15/2010.2009-01-11 05:35, By: Ed_B, IP: []

L4: Can I stop my SEPP payments after 5 years with no penalties?Thanks for the reply. I guess I’m asking for the document that says simply that the SEPP payment can be ended after the longer of 5 years and reaching age 59.5. All the IRS docs I’ve read include the phrase “payments must be taken for the life (or life expectancy)” of the individual. Does any IRS document explicitly indicate that the SEPP can be ended with no penalty or does that have to be inferred?2009-01-11 18:46, By: poor, IP: []

L5: Can I stop my SEPP payments after 5 years with no penalties?The IRS intreprets the code, Congress write the code.Start by reading Rev.Rul 2002-62Section 1.02(c) Internal Revenue Code Section 72(t)(4)(A)(ii)(I) – If I were you I would also consider getting a new tax advisor.2009-01-11 19:29, By: Gfw, IP: []

L6: Can I stop my SEPP payments after 5 years with no penalties?Would you please tell us the credentials of your tax advisor.Thanks,Joel2009-01-11 22:18, By: Joel, IP: []

L5: Can I stop my SEPP payments after 5 years with no penalties?
“(c) Section 72(t)(4) provides that if the series of substantially equal periodic payments that is otherwise excepted from the 10-percent tax is subsequently modified (other than by reason of death or disability) within a 5-year period beginning on the date of the first payment, or, if later, age 591/2, the exception to the 10-percent tax does not apply, and the taxpayer’s tax for the year of modification shall be increased by an amount which, but for the exception,would have been imposed, plus interest for the deferral period.”My reading of the above is that if a 72t plan is NOT modified within the time frame of 5 years or age 59.5 (if later) then the 10% early withdrawal tax is not applicable.Remember, the 10% penalty tax for early withdrawals was meant to discourage people from withdrawing their IRA money prior to age 59.5. With no SEPP plan in place, once that age is reached, no 10% tax is due on the withdrawals. With a SEPP plan in place, the latter of 5 year / age 59.5 rule comes into play.2009-01-11 22:15, By: Ed_B, IP: []

L6: Can I stop my SEPP payments after 5 years with no penalties?Actually, for those of you who are interested; originally IRC 72(t) only had three exceptions to the 10% surtax: (1) death, (2) disability; (3) age 59.5. Then, come the tax reform act of 1986 (I think), some legislators wanted to both; grant some access to IRA accounts before age 59.5, but, at the same time prevent people from robbing their retirement funds or otherwise start treating an IRA like a savings account. A comprise was reached with the “later of 5 years or age 59.5” language in IRC 72(t)(4)coupled with the “design” language of IRC 72(t)(2)(A)(iv)’; e.g. Congress was really saying that if you really want to retire then do so for life and design a distribution plan that is at least designed to last your lifetime from the onset; however, we will give you an “out” for unusual circumstances after attaining 5 years of distributions and 59.5 age as lots of other retirement like programs tends to start kicking in such as private defined benefit pensions and social security.TheBadgerwjstecker@wispertel.net2009-01-11 22:32, By: TheBadger, IP: []