Define “Date of first payment”
L1: Define “Date of first payment”On June 4, 2010, I began 72t distributions from my IRA R/O. I was 57 years old (turned 58 later that year). The first payment covered the first 6 months of 2010 and then I took equal monthly payments, beginning in July, 2010, for the next 54 months. Therefore, I have now taken 5 calendar years worth of payments (60th payment was in December, 2014) and I am 62 years old. I would like to cease the monthly payments and only take what I need as my financial situation has changed, but don’t want to run afoul of the 5 year rule and end up in a penalty situation. So, what is the date of my first payment? Is it June 4, 2010 and I have to consider June 5, 2014 as when I can forget about SEPP and penalty rules? Or is it January 1, 2010 and I’m in the clear now because I’ve already taken 5 years worth of payments? Thanks in advance2014-12-28 18:45, By: Tunkmaster, IP: [184.108.40.206]
L2: Define “Date of first payment”Taken from the First modification calculator statement.
“For purposes of the 5-Year rule, the clock starts on the date the first distribution occurs. Also note that for purposes of the 5-Year rule you must take one annual distribution in each of the 1st 5 years for a total of 5 annual distributions.”
If you have a 5 year plan and have taken 5 annual payments then nothing can be taken until 5 years and 1 day after the plan began.2014-12-28 19:37, By: Scott, IP: [220.127.116.11]
L3: Define “Date of first payment”As is stated several places on the website, even though you may have taken the equivalent of 5 annual payments in the first 4 years and 1 day, you cannot take any more until after 60 months from the day of the first distribution. Therefore, you cannot take another distribution until 6/5/2015, and after that date you can take any amount because your SEPP 72-T will be ended as of 6/4/2015. You could also take -0- after 6/5/2015.2014-12-28 23:11, By: dlzallestaxes, IP: [18.104.22.168]
L3: Define “Date of first payment”So, I gather that you are saying the SEPP 72t plan is measured by the 5 years starting with the first payment date, similar to a fiscal year. Annual payments don’t have to align with that fiscal year and can be recorded on a calendar year basis.
So in my case, my first payment was June 4, 2010 and the plan can’t terminate or be modified until after June 4, 2015. However, my 5 annual payments under the plan occurred in the 5 calendar years 2010-2014. I’ve met the requirements of 5 annual payments and age but need to “run out the clock” until June 5, 2015. I should not take any more payments until that date. After June 5, 2015, I’ll be considered as just another 62 year old with an IRA.
Do I have that right?2014-12-28 23:20, By: Tunkmaster, IP: [22.214.171.124]
L4: Define “Date of first payment”Correct.2014-12-29 01:14, By: dlzallestaxes, IP: [126.96.36.199]
L5: Define “Date of first payment”Thank you for all your help now and over the past 5 years.2014-12-30 04:39, By: Tunkmaster, IP: [188.8.131.52]