Confusion about last 72t Payment

L1: Confusion about last 72t PaymentHere is my information:
DOB: 11/08/47
Calculation method: Amortization
Annual payout: $33,797.59
First Payment was July 1, 2004 in monthly payments
1099-R for 2004 from Plan Administrator was $16,898.82
1099-R for 2005 from Plan Administrator was $33,797.64
1099-R for 2006 from Plan Administrator will be $33,797.64
1099-R for 2007, 2008expected to be $33,797.64
1099-R for 2009 expected to be $16,898.82
Using this site”s calculators, the earliest date I can modify my monthly payments
will be July 1, 2009. How does the IRS reconcile that I have not had five (5) complete
tax years withdrawing the $33,797.64?
Is the modification date of July 1, 2009 accurate?
2006-12-04 07:25, By: RetiredBob, IP: [71.2.53.53]

L2: Confusion about last 72t PaymentThink of in terms of fiscal years starting with the July 1 date of the first payment. The distribution table follows:
7/1/2004 – 6/30-2005 = 33,797.597/1/2005 – 6/30-2006 = 33,797.597/1/2006 – 6/30-2007 = 33,797.597/1/2007 – 6/30-2008 = 33,797.597/1/2008 – 6/30-2009 = 33,797.59
Total payout during the 5 year period must equal 33797 times 5.2006-12-04 07:41, By: Gfw, IP: [24.148.85.129]

L2: Confusion about last 72t PaymentI”m confused by GFW”s response. I was under the impression that you could take stub year payments on your first and last year and it was based on the date of the first payment. I”m referring to my post Rick H on October 16 and the response from Alan S. Now it appears that you must take the full amount each year. HELP before my wife starts her payouts2006-12-05 08:19, By: Rick H, IP: [148.78.243.121]

L2: Confusion about last 72t PaymentThere is no problem with stub years. However, you brougt up the 5-year rule which is somewhat different.
If you are using the 5 year rule then as per the previous post the plan must last a5 full years and there must be 5 full annual payments made during the 5 years.2006-12-05 08:41, By: Gfw, IP: [24.148.85.129]

L2: Confusion about last 72t PaymentIt seems that different terminology is confusing the issue but isn”t the same thing being said.
Gfw suggested to consider fiscal years, with the year beginning on Jul 1 with 5 years of equal payments.
But isn”t this the same as a stub year at the beginning and at the end and 4 calendar years in between?
My SEPP is almost exactly the same as the original poster except it started a year earlier. I”ve been taking monthly distributions since the beginning and plan on continuing that pattern until July 2008. After the 60th distribution my SEPP will be complete and I”ll be 61 at that time and will take distributions as needed rather than as dictated by my plan. (In Jan of the last stub year I may take all 6 distributions at once but the end result for the 1099 will be the same.)2006-12-05 09:13, By: John, IP: [71.208.229.169]

L2: Confusion about last 72t PaymentI stay confused about the last required payment. My sepp started on Jan 5, 2000 with monthly payments.I will be 59.5 in March of 2007. Iam going to decide on one of two options:
1. Exercise the one time change of method (from amort to minimum) effective Jan 2007 by computing the “new” annual payment then dividing that amount by 12. Then I will take 3 times the “new” monthlypayment in Jan 2007 and I”m done with the plan or :
2. Just continue the same payments until March 2007, then quit the plan.
I really want to take as little out of the sepp as possible in 2007 so option 1 will do that.
Am I safe with either option??
Bill
2006-12-05 09:45, By: Bill, IP: [162.84.127.32]

L2: Confusion about last 72t PaymentJohn:
Yes, it is the same as a stub year on each end and full years in between. Your plan sound fine, just be sure if you take all 6 distributions in January, 08 that you don”t forget that your 5 year period is not yet over and mistakenly take another before July.

Bill,
Option 2 is rock solid, but Option 1 may be less so, because the RMD method is arguably not compatible with a fiscal year plan. Fiscal year plans and rulings involving stub years seem to have been under the amortization or annuity methods. Not only that, but your first year was not a stub year, so you can”t reference any consistency with your first year. While you probably would be OK, I”d hate to handicap “probably.” Particularly with 7 years of distributions at risk, I think I would stick with Option 2.
Perhaps Gordon or Bill knows of a ruling that provides more assurance regarding Option 1…………

2006-12-05 11:08, By: Alan S., IP: [24.116.66.98]

L2: Confusion about last 72t PaymentAlan,

Yes, it is the same as a stub year on each end and full years in between. Your plan sound fine, just be sure if you take all 6 distributions in January, 08 that you don”t forget that your 5 year period is not yet over and mistakenly take another before July.
Thank you for posting the above response to my comments. From the excellent information found on this site and through the discussions I have learned a lot, but the wording wording for ending a 72(t) mid-year end has always been a nagging concern with me. I”ve concentrated on the discussion forum for the last few years since my SEPP was established in Jul 2003 and maybe I should go back to the FAQ to see howit treats the subject. And yes, I do remember that if I take mycomplete distribution for the last year in Jan I can”t take anything else until after July. Taking my complete distribution in Jan may allow some flexibility in using that money that would not otherwise be available to me. I”ve got a whole year to think about that.
At the risk of changing the topic I need to note that between the time I posted this response and my earlier one in this same string I found that I could not post responses (I”m using a different computer for this one.) I could get to the point of entering the nickname and email address but I could never get the cursor into the text box to enter my text. I”m sure it is a problem with my computer but I haven”t got a clue what it might be and am curious if anyone has a suggestion for what I should look into.
Thanks again!2006-12-06 04:19, By: John, IP: [71.208.229.169]