Determining the SEPP “Total Value of IRA”
L1: Determining the SEPP “Total Value of IRA”
I have a Roth IRA, 2 IRA Rollovers, and Cash Pension Plan and 401(k) accounts that I’ll have access to shortly under an early retirement package. I’m 56 1/2. Payments won’t need to start for at least 6 months, so I have time to figure this out.
When determining the “Total Value of IRA” amount, do I add all the plan values together, or does each SEPP stand alone? Can I have a SEPP against more than 1 account?
2018-03-23 19:58, By: Jim, IP: [184.108.40.206]
L2: Determining the SEPP “Total Value of IRA”
Let’s start with a basic rule — all different types of accounts must be kept separate — PENSION and 401-K accounts are separate from IRA’s, unless you roll them into the IRA’s.
I would not include ROTH IRA’s in a SEPP 72-T “UNIVERSE”. Use the “reverse calculator” on this website to determine the minimum amount you need to set aside for the SEPP plan. Then put the remainder into a separate non-SEPP account for emergencies, or to set up additional SEPP plans in the future.
2018-03-24 00:56, By: dlzallestaxes, IP: [220.127.116.11]
L3: Determining the SEPP “Total Value of IRA”
Since you are separating at 55 or later, you can take penalty free distributions from your 401k plan of the employer you are separating from. That would avoid the need for a 72t plan entirely. The only pitfall is that your 401k plan must allow you to take partial distributions instead of a lump sum. But all you need is at least one distribution a year for the next 3 years. Even better if you are allowed to set up monthly or quarterly distributions.
2018-03-24 04:53, By: Alan S, IP: [18.104.22.168]