distribution amount vs current market Value

You are here:
  • KB Home
  • distribution amount vs current market Value
< Back

L1: distribution amount vs current market Value
I gave Fidelity my Numbers for distribution using your calculator which was about 56,600
using my age, 3.69 , and peak market value from a week ago.
They downed it to 53k . I think they used 12/31 closing balance and 3.69
Now they told me they don’t give advice and I had to do my own math.
But then they ignored what I came up with which I checked many ways.
Am I correct that I can use any prior markey value before I made my request for distribution. $3600 a year matters to me.
Yes I just confirmed they used 3.69 and 12/31/2018 balance

Thanks Pete
2019-01-29 14:35, By: High Tech Red Neck, IP: [2601:588:8400:3c0:ac1e:634:a91a:a6b9]

L2: distribution amount vs current market Value
I retired May 1st 2018. I took the average of all the month-end closing balances for the 8 months of 2018 and vanguard accepted that amount with the 3.69 rate for my first distribution during the second week of Jan.
2019-01-29 16:35, By: west coast, IP: []

L2: distribution amount vs current market Value
Yes, you can use your market value on any date prior to your distribution and generally not older than 6 months or considerably higher than the balance when your first distribution is taken. Your plan is between you and the IRS and if you provide Fidelity with a market value one week back, they should not be changing it to the value on a different date.
That said, you must be able to document the market value you used and there is also a statement issued at the end of every month in most cases, and always at the end of the year. You can make a screen print of the account value on the day you selected and I presume you did that. If you didn’t and cannot, then you will have to use another date, and even 12/31 as that might be the only prior date for which there is a permanent statement available. If you can print off the 11/30 statement, that would probably be higher than 12/31 and you could use that. Not sure if you can reproduce the value of your account on some other date if you did not make a screen print of the value on the exact date you planned to use. You are taking a big chance if you cannot produce a copy if your plan is ever audited for whatever reason. So this boils down to the availability of making a copy as of a certain date.
2019-01-29 16:48, By: Alan S, IP: []

L3: distribution amount vs current market Value
westcoast, your plan is between you and the IRS. Vanguard cannot validate your plan and will not code your 1099R with code 2. Using an average of different months has never been a recognized IRS option, so if you are audited for whatever reason you will have to hope that the IRS would accept your documentation, but you are taking a chance because the IRS examiner has likely never seen anyone attempt to do this before.
2019-01-29 16:55, By: Alan S, IP: []

L4: distribution amount vs current market Value
westcoast — With all of the thousands of postings here, numerous tax practitioners and financial planners, I do not understand why you would decide to use your own methodology which no one has ever mentioned as an acceptable method. If/when the IRS audits your plan, be prepared to pay the 10% penalty for early distributions, unless you get very lucky with a sympathetic or untrained agent.
Since you just started your plan, I would scrap the average balance calculation you used. Also, usually we recommend no more than any balance in the past 6 months. You might be able to find an acceptable date on which the balance was the same as the average balance you calculated. Then use that as your documentation. If the annual amount, and prorated distribution, are off slightly, you might be able to modify your interest rate assumption to get the correct formula. Since you have only taken one distribution, you have the rest of 2019 to make an adjustment to get the correct annual total. There isn’t any requirement that the same amount be distributed each month, only each year. Remember that the documentation in known only to you at this point.
2019-01-29 20:18, By: dlzallestaxes, IP: []