Distribution change for the year
L1: Distribution change for the yearI am currently taking equal monthly payments from my sepp for the last 2 years. Can I take a lump sum payment at the beginning of 2013 equal to my monthly payment times twelve that I am receiving now if that is all I receive for the rest of 2013? Or will I have to pay a penalty? I am 54 years old if that matters.2012-10-18 15:48, By: Lodibob23p, IP: [184.108.40.206]
L2: Distribution change for the yearIf you have had your plan for 2 years and you will have it for 5 more years, then you are on a to age 59.5 plan and not a 5-year plan. You can take out as much as you want any time you want and long as you take the annual amount (no more and no less) sometime between 1/1 & 12/31.
With that said, when you did the initial calculations, were the calculations based on the annual rate (most common) or monthly rate as used by certain brokerage firms?
2012-10-18 18:46, By: Gfw, IP: [220.127.116.11]
L3: Distribution change for the yearThe annual rate figured by the 72t calculator2012-10-19 02:13, By: Distribution change , IP: [18.104.22.168]
L4: Distribution change for the yearI am not sure what gfw had in mind by asking about the distribution frequency. In the past, I believe that custodian calculation variance due to distribution pattern was consideredimmaterial. Maybe something has changed???
If you used their annual rate, then there should be no custodian change to their distribution code in the unlikely event they have been providing code 2 in the past. If theyhappen tochange from a 2 to Code 1due to your pattern change, then you would simply file a 5329 and indicate exception code “02” fora valid SEPP plan.
Just be totally sure to distribute the correct total annual amount for the year, regardless of distribution timing. The correct amount would be exactly the same annual total as you have been taking all along.
2012-10-19 02:38, By: Alan S, IP: [22.214.171.124]
L5: Distribution change for the yearThe caution in all this is if you need that much money for each calendar year, and all of a sudden you have access to all of it in January, it may be quite easy to lose control of your budgeting, and somehow “go thru it” in less than 12 months. Then, you cannot touch the IRA for more money, until January of the next year without triggering the penalty.
If you really have to change from monthly, Iwould suggest changing to QTRLY payments, in Jan, Apr, July & Oct, and see if the money lasts each Qtr until the next installment shows up, before you try to make a January payment last all year. It will get 2 of each quarter’s monthly payments to you sooner than in the past.
I used Qtrly pmnts on first SEPP for first 2 years, then changed to monthly payments for last 3 years of that plan, and I never thought of going back.
KEN2012-10-19 03:48, By: Ken, IP: [126.96.36.199]