draw from 401K in 2017 when I turn 55 in Dec 2017
L1: draw from 401K in 2017 when I turn 55 in Dec 2017New plan. 12-24-1962. My formal retirement date is 2 Jan 2017 documented. My final 401k deposit will be mid Jan. My company allows me to set up monthly payments from my 401K and the service rates are very reasonable at 0.20% so I want to keep them there. I plan on starting my draw in Feb of 2017 at only 4% rate so I should not draw down my plan.
Please let me know if you see any problems. I also want to thank you for the tip on this from a previous post. I was able to work until 2 Jan to get my retirement in the calendar year I turn 55. Thanks and let me know if I am missing something.2016-12-28 02:58, By: lamopar, IP: [188.8.131.52]
L2: draw from 401K in 2017 when I turn 55 in Dec 2017You appear to be all set. Because you will meet the age 55 separation exception and your 401k plan apparently allows flexible distributions, you do not need a 72t plan. You will avoid the risk of busting such a plan and also the risk that your distributions do not meet your needs due to unpredictable developments.
If your plan only allows you to change your payment amount once a year, be careful to pad the first year somewhat to provide you with a safety margin. If you can change the payment amount a couple times a year that would be better due to the added flexibility.
Your 1099R should show code 2 on it because the plan obviously knows your age and the administrators are well aware of the age 55 exception. If they mess up, you can file a 5329 to claim the exception yourself. You can then do a direct rollover to an IRA once you reach 59.5 if you wish and also at that time check to see if NUA is viable for you if you have highly appreciated employer shares in the plan. Age 59.5 is a new triggering event for NUA even though you have been taking distributions since retirement.2016-12-28 03:29, By: Alan S, IP: [184.108.40.206]
L3: draw from 401K in 2017 when I turn 55 in Dec 2017There was a change and now my employer does not allow new installments. I am back to starting an SEPP. My birthday is Dec 24, 1962. My first installment will be in March 8th, 2017. I am waiting for the IRA roll over to hit USAA to send them my payment information.
I want to use the fixed annuitization method as I am not invested in changing each year. I am planning on using the interest rate of 2.36 and according to the single life table the rate is 30.5. My starting balance is $416,485.33. When I run the calculator I see there is a distribution factor of 21.224. I have been trying to get this from the tables but don’t see the formula. I just want to double check it and have it in writing that I am doing it correct.2017-01-17 23:34, By: Lamopar, IP: [220.127.116.11]
L4: draw from 401K in 2017 when I turn 55 in Dec 2017If you mean the plan only allows lump sum distributions you will need a SEPP. But if the plan for example will allow you one annual distribution that you could change from year to year, you could still avoid a SEPP.
The fixed annuitization method does not use any of the IRS RMD tables. It applies a mortality table for your age and an interest rate and you need to be a math whiz to determine the annual payment without using one of the calculators such as the one on this site.
I come up with an annual distribution of 19,623.32 and agree with your 21.224 distribution factor.
Be sure that the rollover of the entire plan balance with no trailing dividends or other payments is complete before taking your distribution. You must use the IRA balance after the rollover is complete for your account balance. For the first year you can either distribute the full annual amount or 10/12 of the annual amount. Finally, note that the amortization method will produce a slightly higher annual distribution and because of that the annuitization method is rarely used.2017-01-18 02:20, By: Alan S, IP: [18.104.22.168]
L5: draw from 401K in 2017 when I turn 55 in Dec 2017Thank you for the information. The only options from the company is a lump payment directly to me, leave it in the fund or roll it over.
I documented everything that I used to get the same annual payment you stated above. I plan on using a partial payment 10/12 for this year so all payments stay exactly the same every year for the plan. It seems to me that as long as I stay with the exact same payment every month every year it will be hard to break the plan as long as no money enters the IRA from me.
Thank you also for the tip on the dividends. I will work with my employer to ensure that is not the case and check with USAA if I have an option for other money rolling in from it to go to my other IRA.
2017-01-18 13:39, By: Lamopar, IP: [22.214.171.124]
L5: draw from 401K in 2017 when I turn 55 in Dec 2017One question before I mess up the year. When I divide the total amount by 12 to get a monthly installment it does not come out to an exact dollar/cents amount. so if I take the amount and it leaves me $0.08 cents short on the amount my plan comes out to but I take the exact amount every year and it is always that much off does that bust the plan? I just wonder if I need to at one point in the year request a change of payment to cover the $0.08?2017-03-15 04:47, By: Lamopar, IP: [126.96.36.199]
L4: draw from 401K in 2017 when I turn 55 in Dec 2017When was the change made ? When were you notified ? What does the plan documents say as to when employees must be notified ?
If you had signed up before the change you might be grandfathered.
You might want to check with a labor or pension lawyer to see if you have a cause for action, or to require them to allow you to execute your plan. If there were others affected, you might have a class action.
I hate companies who think they are above the law, if that applies here.2017-01-18 04:54, By: dlzallestaxes, IP: [188.8.131.52]
L5: draw from 401K in 2017 when I turn 55 in Dec 2017I wish I had documentation from back in 2015 when they combined all the plans into one plan for the corporation. I was notified and received documentation on it but since it stated my funding options were the same I paid little attention to it. I spoke to quite a few people and no one kept anything from then and at the time I never planned on taking money from the plan until 59 1/2 so it was not something I was looking at. I have already rolled my money out of the 401K and into the IRA.
I agree that the company is not doing anything in the interest of the employee at any time and I expect when I can start drawing my pension for them to dry and buy me out. I am starting to look into what my options are at that time.2017-01-18 13:48, By: Lamopar, IP: [184.108.40.206]