Changing from annuitization to min distribution me
L1: Changing from annuitization to min distribution meAccount is running low and I don”t need the same income as when I established my 72t in July 2007, thanks to full-time work that I”ve undertaken.I understand that I can switch from annuitization to mid dist method at the end of the year, to begin the new, lower distribution Jan ”09. I understand that I cannot make the switch now but must wait until ”09.
Here”s my question: will the new payment be based on cutting my existing payment, as received now ($2,800 gross per month) in half–to $1,400? Or, will it be based on my Dec. 31st, ”08 account value?2008-07-23 09:48, By: Ryan, IP: [184.108.40.206]
L2: Changing from annuitization to min distribution meRyan,If you change to MINIMUM DIST methodin Jan 2009, make sure to tell your custodian not to issue another regular payment in January, since you will be submitting revised figures to use starting in Jan 2009. I cannot imagine that it would be exactly 1/2 of what you now get. It is actually computed using a formula that includes your age, andyour account balance, and for Jan 2009, it would be best to use 12/31/08 balance, and you need to plug it in to the 72t calculator on this site for MIN DIST to find out what the annual amount will be, then divide by 12 if you are being paid monthly. The interest rates have no effect on the calc for MIN DIST, so just ignore them when you plug in your age (that you will attain in 2009) and yr ending SEPP balance to get your new payment amount under MIN DIST. Although you don”t know the ending balance now, you can take a guess at it now,to see an estimate of the new annual amountmight be in 2009, then redo the calc after getting REAL yr end balance for exact figure that you submit to the custodian. Keep in mind that you have to repeat this process of computing the next year”s MIN DIST payment at each year end until your SEPP ends
I have read a few times on this sitewhere some people have wanted to change to MIN DIST part way thru a year, but they were advised that it can be messy, and I would think it would likely create questions by the IRS, so I would suggest that you do it in January 09. I hopethis helps. KEN2008-07-23 13:25, By: Ken, IP: [220.127.116.11]