explain prorating for distributions for 8 months the first calendar yeat
L1: explain prorating for distributions for 8 months the first calendar yeatI took $5000 that will be subject to 10% penalty in Jan 2017. bd 5/23/63 consider SEPP starting in 4/4/17. based on $505000. IRA balance $23958 annual dist. 8 months would be $1996.50per month or $15972 in the first year or do I still have to take the $23958 by 12/31/17. I have a small income and want to keep my adjusted taxable income in the 15% bracket the $5000 dist will put me over if I have to take the full year instead of pro rate 8 months.
also my birthday in may would my end date be 11/20222017-03-01 08:03, By: redhead, IP: [184.108.40.206]
L2: explain prorating for distributions for 8 months the first calendar yeatYou may not understand SEPP 72-T rules, or I may not be understanding what you are asking.
SEPP 72-T plans START when you take the first distribution, which was in January. Assuming that you used the correct balance (i.e. 12/31/2016), and correct interest rate, then the $ 5,000 you took could be part of the $23,958 ANNUAL DISTRIBUTION. Since you took it in January, you would have to use 12 months as your prorata distribution.
If you had not taken the $ 5,000 and your first distribution would be taken in April 2017, then you could use either the 9/12 proration ( NOT 8/12), or take the full $ 23,958.
There would have been a solution if you had separated your SEPP 72-T “universe” into a separate IRA ACCOUNT before taking your first distribution. At this point, I suggest paying the $ 500 penalty for the January distribution, and then separate your IRA account into 2 accounts, with one of them being for the amount that is needed to support the ANNUAL DISTRIBUTION that will keep you in the 15% tax bracket for 2017, and for the next 5 1/2 years until you are 59 1/2. If necessary, take the prorata distribution in 2017 based upon the separate account, or change the month you start your SEPP. Then in January 2018 you can start the 2nd SEPP 72-T, in which case the total of the two SEPP 72-T plans might still be in the 15% tax bracket.
Another possibility would be similar to the above approach, but starting the second SEPP 72-T in Nov/Dec if that additional prorata distribution would still be in the 15% tax bracket.
You might want to work with a tax and/or financial planning professional who is familiar with SEPP 72-T nuances to help you work out a viable plan.2017-03-01 16:28, By: dlzallestaxes, IP: [220.127.116.11]
L3: explain prorating for distributions for 8 months the first calendar yeatI have not started SePP72T. the 5000 was just a withdraw that I know will incurr 10% penalty. which I plan to take another 15000 for a 2000 penalty total.
if I start SEpp April – June this year 5 years from now would put me at 59 1/2 yrs old.so I could end it 2022.
so the question is: setting it up into equal distributions monthly I would only be taking 8 months of distributions (which is what I want) and not wanting 12 months or annual total in this 2017 yr. Am i correct in thinking that monthly distributions will accomplish my goal or will I have to not start until jan2018 forcing me to have to stick with SEPP until 2013 60 yrs and a few months?
key word in my original post Consider starting 4/4/172017-03-01 19:32, By: redhead, IP: [18.104.22.168]
L4: explain prorating for distributions for 8 months the first calendar yeatStarting 4/4/17 is 9 monthly payments. You can take payments at any regular or irregular frequency. For example, $ 24,000 ANNUAL or $ 18,000 for $ 2,000/mo for 9 months, or 3 quarterly distributions of $ 4,500 plus $ 4,500 in mid Dec., or 2 semi-annual distributions of $ 9,000 each. Even if you start in April, you COULD take the $ 24,000 rather than $ 18,000 if it still kept you in the 15% tax bracket. No reason to incur another $ 1,500 penalty if the $ 18,000 prorata wouldn’t push you into 25% bracket. If it would, can you wait until June, and take $ 14,000 thru the end of the year?
In 2018 you can use a different payment structure, as long as you took the correct ANNUAL total.2017-03-01 20:20, By: dlzallestaxes, IP: [22.214.171.124]