Change from RMD to Annuity or Amortization
L1: Change from RMD to Annuity or AmortizationI have an existing SEPP which I began in July 2013 in which I have been using the RMD distribution amount. DOB 10/08/1959.
Question: At January 1, 2017 can I change to the Amortization or Annuity calculation?
2016-12-31 18:06, By: Puts.n.Calls, IP: [126.96.36.199]
L2: Change from RMD to Annuity or Amortization>> can I change to the Amortization or Annuity calculation?No. A change can only be made to the Minimum Distribution Method…
Rev Rul 2002-62 Section 2.03(b) One-time change to required minimum distribution method. An individual who begins distributions in a year using either the fixed amortization method or the fixed annuitization method may in any subsequent year switch to the required minimum distribution method to determine the payment for the year of the switch and all subsequent years and the change in method will not be treated as a modification within the meaning of 72(t)(4). Once a change is made under this paragraph, the required minimum distribution method must be followed in all subsequent years. Any subsequent change will be a modification for purposes of 72(t)(4). 2016-12-31 18:20, By: Gfw, IP: [188.8.131.52]
L3: Change from RMD to Annuity or AmortizationThere have now been two straight threads where the RMD method has been used, and this method should not normally be used because either of the fixed dollar methods will generate roughly a 50% higher annual distribution. That would enable roughly 1/3 of the IRA balance to be partitioned into another IRA that would not be part of the plan but would provide funds for emergency distributions that might save the 72t plan from being busted. In addition, using either of the fixed dollar methods requires only the one initial calculation instead of a new one every year, and also provides a one time switch to the RMD method if the fixed amount was no longer needed.2016-12-31 20:54, By: Alan S, IP: [184.108.40.206]
L4: Change from RMD to Annuity or AmortizationAlan S – excellent observation. Had I done my homework when I started my SEPP I would have set it up precisely as you describe. Take note all those preparing to establish your SEPP – Alan S provides you valuable advice.2017-01-01 16:07, By: puts.n.calls, IP: [220.127.116.11]
L5: Change from RMD to Annuity or AmortizationUnfortunately the IRS has several identical or similar sounding names to describe completely different situations.
SEP-IRA’s are different from SEPP 72-T.
REQUIRED MINIMUM DISTRIBUTIONS (RMD) are different when reaching 70 1/2 than for SEPP 72-T distributions.
IRA ROLLOVERS seem to be the same as IRA TRANSFERS, but with different consequences.
Tax Deductions, Allowances, and Credits all have different consequences.
SEPP 72-T “Annuity” is a calculation, not an investment.
It is a very “taxing” situation for everyone.
HAPPY NEW YEAR.2017-01-01 16:58, By: dlzallestaxes, IP: [18.104.22.168]