Does additional pension $ awarded due to Company mistake have to go into the SEPP we are using. I am 2 months short of 59 1/2,

L1: Does additional pension $ awarded due to Company mistake have to go into the SEPP we are using. I am 2 months short of 59 1/2,
I have had an SEPP since 7/08.My pension and 401k are both rolled into it. SEPP first payment was 7/08. As a result of a lawsuit, additional pension $ were sent to me which I would like to use when I reach 59 1/2. Birthdate
is 10/29/1952.
My question is, will using these additional funds at 59 1/2 invoke the IRS 10% penalty on all money received to this point from my SEPP?Does this have to be rolled into my SEPP? I would like to use these funds upon reaching
59 1/2. I am just a few months short of 59 1/2. Birthdate is 10/52.
2012-01-17 18:24, By: moose, IP: [98.200.65.113]

L2: Does additional pension $ awarded due to Company mistake have to go into the SEPP we are using. I am 2 months short of 59 1/2,
The funds do not have to be rolled into your SEPP IRA and you need to avoid doing that because it would bust your plan. The IRA custodian would issue a 5498 showing a contribution to the IRA, thereby reporting this disallowed
IRA contribution to the IRS as well as to you.
You can roll it to a newly opened IRA or another IRA you might hold outside of the account used for the SEPP. If the distribution was payable to you you might also be able to cash it if you can confirm that the 1099R will show
the exception code 2. That would apply if you separated from the issuing company in the year you reached 55 or later. Otherwise, it will be coded as an early distribution and you would have to roll it over to avoid the 10% penalty, then take an IRA distribution
after reaching 59.5.
But do not roll this over to your SEPP IRA account as your plan must run 5 years until 7/2013 before any non SEPP transactions are conducted with that IRA.

2012-01-17 20:12, By: Alan S., IP: [24.116.66.40]

L3: Does additional pension $ awarded due to Company mistake have to go into the SEPP we are using. I am 2 months short of 59 1/2,Great, thorough answer, especially the last part, because too many people don’t count the 60 months properly.2012-01-17 21:57, By: dlzallestaxes, IP: [96.227.217.194]