End date of 72t
L1: End date of 72tDOB 2/6/1955
First 72tDistribution 10/1/2005
I spoke with Fidelity about stopping my withdrawals as I am turning 59 1/2 on 8/6/2014.
The retirement “specialist” said I had to continue to 10/1/14, as my firstdistribution was on Oct 1.
I tried to explain that would only apply if the 5 year rule was controlling, but since I was turning 59 1/2 and had 9 years of distributions, that was not the case. She said the IRS might disagree, but I could do as I pleased as long as I signed a statement saying I was disregarding their advice.
My CPA agrees with me. Any ideas?2014-08-02 19:56, By: Bruce, IP: [184.108.40.206]
L2: End date of 72tYou don’t say how you are taking your distributions, but my guess is that they are monthly. Based on your statement that the 5 year rules is not applicable, in the year that you turn age 59.5, you can…
Take nothing; or
Take the full annual distribution; or
Take a pro-rated amount based on the number of months in the year prior to reaching age 59.5
2014-08-02 22:40, By: Gfw, IP: [220.127.116.11]
L3: End date of 72tI am taking the payments monthly on the 1st of each month.
From your answer, having already taken 8 monthly payments this year, (the year I turn 59 1/2) I can stop the payments now.
Why do you suppose the Fidelity IRA and Retirement specialist could misinterpret the rules so badly?2014-08-03 13:51, By: Bruce, IP: [18.104.22.168]
L4: End date of 72tYes, you can stop SEPP distributions now as 8 monthly payments are one of the allowable options.
The rules for the final year of a SEPP plan are not clearly stated in the tax code of the IRS Regs. The conclusion regarding the 3 options have been cobbled together after considering various IRS letter rulings and Notices, none of which are very clear on what the final year options are. Fortuneately, the IRS rarely busts a SEPP in the final year unless someone exceeds the annual distribution amount before the plan modification date is reached or the annual distribution has no meaningful relationship to the annual calculation. In this sense it is not surprising that Fidelity has come up with a different conclusion than this site. However, their advice is fairly likely to cause a problem because 10 months of distributions (10/12 of the annual) is not close to either of the 3 options outlined by gfw. If they felt the options should be restricted to one or two of the stated options, that would be more defensible than using 10 months, therefore the particular rep likely became confused regarding the training that was done.
We have not had anyone using one of the 3 options posted indicate that they had problems with the IRS.2014-08-04 17:59, By: Alan S, IP: [22.214.171.124]