L1: Existing SEPPDOB 4/8/1960
1st dist 8/5/2014
Reasonable rate 2.27%
Account value $1M
I am back checking an SEPP established and calculated by the custodian of this IRA.
They figured it with monthly distributions of $3880.29 which started in Aug. 2014 and they show it continuing through Oct. 2019 (the month I turn 59 1/2). They have sent the checks monthly on schedule, mark the 1099 so I am not required to file the 5329 and withhold both state and federal taxes. Seems to be working fine, but the numbers seem quite different than an annual distribution and the final year is 10 installments. It’s a different outcome than I would expect using the SEPP calculator here.
Your comments please.
2015-07-11 21:04, By: Mackster, IP: [18.104.22.168]
L2: Existing SEPPI get an annual distribution of $45,591.32 divided by 12 = $3,799.25. It is possible that they are using a monthly calculation based on a monthly rate. If yes, then you are locked into monthly payments.
I don’t know their exact assumptions, but there are a few places that are still calculating based on the 89-25 ruling. I wouldn’t worry much about it… just make sure that you have a copy of their original calculations and assumptions if you ever get audited. 2015-07-11 21:21, By: Gfw, IP: [22.214.171.124]
L3: Existing SEPP/SEPP IRA direct transferOK, Thanks. I figured the monthly calculation would be different, just not that much. Was also surprised the last year wasn’t a full years distribution. I will be sure to get a copy of all calculations and assumptions.
Would you recommend against a direct transfer of an SEPP IRA to a new custodian if I was looking to make a change in custodians? I would make NO changes to the monthly distributions or any other part of the plan if I did so.
Thanks for the help and the advice.2015-07-11 21:31, By: Mackster, IP: [126.96.36.199]
L4: Existing SEPP/SEPP IRA direct transferIf I use the amortization method, I get $45,792/12 = $3,816.06… a little closer. I also get an 10/9/2015 end date based on an age 59.5 plan, it wouldn’t be necessary to take a full year – just make sure that from the beginning of the plan to the end, that at least 5 times the annual amount (or 60 payments) have been made to you.
Changing custodians shouldn’t be an issue as long as the plan follows the initial assumptions until the end.
2015-07-11 21:47, By: Gfw, IP: [188.8.131.52]
L5: Existing SEPP/SEPP IRA direct transferI think you mean 10/9/2019, not 2015.2015-07-12 00:33, By: dlzallestaxes, IP: [184.108.40.206]
L6: Existing SEPP/SEPP IRA direct transferDlz… you are correct.. Thanks.2015-07-12 00:52, By: Gfw, IP: [220.127.116.11]
L4: Existing SEPP/SEPP IRA direct transfer”Would you recommend against a direct transfer of an SEPP IRA to a new custodian if I was looking to make a change in custodians? I would make NO changes to the monthly distributions or any other part of the plan if I did so.”
I thought this would bust the plan.2015-07-13 14:07, By: brkr12002, IP: [18.104.22.168]
L5: Existing SEPP/SEPP IRA direct transfer100% transfers are ok. PARTIAL TRANSFERS are a problem under a stupid recent court ruling and IRS interpretation.2015-07-13 15:22, By: dlzallestaxes, IP: [22.214.171.124]