Distribution date question
L1: Distribution date questionStarted my SEPP plan in 2013, taking my first annual distribution on 2/6/13(a single annual distribution payment). Now that we’re in 2014, am I required to take my 2nd year payment exactly on 2/6/14, or can I take it any day in year 2014 ?
I recall reading some earlier posts on this site, which said the subsequent annual distributions had to be at least 365 days after the prior distribution (fiscal year basis ?).
Could someone clarify whether I can take the annual 2014 distribution any day in 2014, or whether it has to be exactly 365 days after.
2014-01-02 07:41, By: EARLYOut, IP: [188.8.131.52]
L2: Distribution date questionIf you are ona to age 65 plan (SEPP didtribution period) is longer than 5 years, take the payment whenever you want. If on a 5 year plan, I would stick to the 02/06 date.2014-01-02 09:35, By: Gfw, IP: [184.108.40.206]
L3: Distribution date questionGfw,
Thank you for the reply. I’m still a little unclear about what is the differentiation between a 5 year plan and the “to age 65” plan that you mention.
Here’s my particular situation-
Payment based on fixed amortization method.I took my first distribution 2/6/13 (age 53 dob 2/28/59). In order to avoid busting my plan I plan to continue taking an annual distribution of the same amount each year, until I’m at least 59 1/2 with the last distribution to satisfy IRS requirement would be 2018 (the year I turn 59 1/2).
Couple of questions.
1) Would you say I am considered on the 5 year plan ? And if so, you suggest that I take each distribution on exactly Feb 6. I thought you could take it any day during the calendar year, so I’m a little unclear how the fiscal rules play out in my scenario.
2) Based on my situation, after satisfying the last distribution @ age 59 1/2 in 2018, when is the first date that I can make a distribution of any chosen amount.
Thanks.2014-01-08 19:12, By: EARLYOut, IP: [220.127.116.11]
L4: Distribution date questionStart by using our last paymment date calculatorhttp://72t.net/72t/Calculator/First/Modification/Dateit will tell you whetehr you are on a 5 year plan or a to age 65 plan.
Where does the fiscal year come into play? From our FAQ…
Q. Assuming the 5-Year rule, when can payments be modified?A.In 1998, a tax court held that a payment received by a taxpayer after he received five equal annual installments and after he reached age 59-1/2 was a modification of the Substantially Equal Periodic Payments.The Court held that the modification occurred within the 5-year period beginning with the first payment, thus triggering the recapture of the 10-percent penalty tax. The Service argued that the 5-year period began with the first distribution and ran until the end of the 5th year. The tax court agreed – the 5-year period closes at the end of the 5 years beginning with the first distribution, and does not end on the date of the 5th annual distribution.Arnold v. Comm., 111 TC No. 12 (1998).
Hope this helps.
2014-01-08 19:27, By: Gfw, IP: [18.104.22.168]
L5: Distribution date questiongfw,
I don’t understand the reference to age 65 – is that a typo?2014-01-08 21:00, By: Alan S, IP: [22.214.171.124]
L6: Distribution date questionIt is a typo – should be age 59.52014-01-08 21:08, By: Gfw, IP: [126.96.36.199]
L7: Distribution date questionYour dob was 2/28/1959. On 2/6/2013 you were 53, almost 54.
You must take distributions to the later of the end of 5 years (60 months) (i.e. 2/7/2018) or age 59 1/2, which would be 8/28/2018 !!!2014-01-09 03:29, By: dlzallestaxes, IP: [188.8.131.52]