Changing SEPP tax deductions

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L1: Changing SEPP tax deductionsMy wife has just reached age 59 1/2 and has been withdrawing on her SEPP for over 7 years. She wants to increase her monthy gross distribution amount and at the same time increase her federal and state tax percentage. She was told by Merrill-Lynch that she can not change it until the end of the year. Is that correct???2010-03-03 17:01, By: Art, IP: []
L2: Changing SEPP tax deductionsArt,That is not correct unless they just have very unfriendly distribution rules that they follow, which have nothing to do with the 72t tax code. I would tell her to call M-L again, and ask for a 72t SEPP expert, and if same story is given to her, she needs to ask to speak to their superior. There is no requirement I have ever heard of to keep a 72t plan running “as is” till the end of a calendar year after a person has met the 59 1/2 requirement and taken at least five years worth of payments. She cantell M-L that she could alwaysopenan IRA with one of their competitors, andhave the new custodian move her entire M-L IRA to them via “trustee to trustee transfer” (most can move the assets as is, so you don’t have to even liquidate to cash for the transfer)if they are not willing to handle her request at M-L. She can also call a few competitors in advance to see who would be willing to set up that new account and do that transfer for her and she will find out how easy this is to do (telling them this info request is in case it can’t be resolved at M-L) before calling M-L for “round two” of this battle.Just curious Was she getting code “2” on her 1099-R each year? That may be their hangup, but no excuse for not making the changes you want. From what I have seen on this site, many custodians will issue 2 1099-R’s in the final calendar year of the 72t plan, with first for final 72t payments coded either 1 or 2, and the other one for post 59 1/2 withdrawals after 72t plan ended that are coded “7”. Ken2010-03-03 18:30, By: Ken, IP: []

L3: Changing SEPP tax deductionsKen,

Thanks for the info and I certainly will try your suggestion with M-L as I jump into round two.. To answer your question, her distribution code is a 2 (eary distribution, exception applies). Mine is a 7 (normal distribution) since I’m no longer under 72T guidelines. That may be the whole problem with M-L, that is, they may not want to do this since it would mean issuing 2 1099s. We’ll see. Thanks again. Art2010-03-03 19:05, By: Art, IP: []

L4: Changing SEPP tax deductionsMake sure that you indicate to other brokers or mutual funds that you want to do a trustee-to-trustee transfer of an IRA. Do not mention that it is coming from a SEPP 72-T because that will just muddy the waters unnecessarily.As stated above, once you satisfy the 5-year/59 1/2 requirements, it ceases being a SEPP 72-T, and you can take any amount from -0- to all of the account(s). You might not be able to transfer any proprietary ML funds.I hate all companies who have incompetent staff, and suggest that you just do the transfer. Once companies like ML learn that they better train their employees better, then maybe they might be entitled to start to get business from me.2010-03-03 22:15, By: dlzallestaxes, IP: []