final stub year
L1: final stub year
If prorating, should my last stub year total distribution = the first year distribution (calculated as if annual), less the first stub year actual, prorated distributions?
That is what the calculator suggests, if I did it right.
I am in year three of a SEPP that I started in 2016 at age 55.9. I am using the minimum distribution method and prorating. For the first, stub year, I used the calculator and my account balance at the end of the month before my first monthly distribution. In January of each year, I send my custodian a new distribution request form using my previous year end balance and new life expectancy.
It seems odd that in the last (stub) year, 2021, I would not calculate the distribution from the previous year end balance (2020), but instead use the remainder of my first year’s distribution (2016), had it been annual instead of prorated.
2018-10-07 06:15, By: kirk, IP: [2606:6000:cb09:a300:d848:b3ee:973f:2380]
L2: final stub year
Your initial age was age 56, not 55.9. Hopefully your calculations started with age 56 and subsequent calculations used your attained age in each following year (56,57,58,59,60).
If you prorated the first year and are using the minimum distribution method, the last distribution would be calculated on the previous years 12/31 balance.
As a point of interest, our calculators are for the initial implementation of a SEPP plan and not the annual maintenance calculations.
2018-10-07 10:14, By: Gfw, IP: [18.104.22.168]
L3: final stub year
Clarification of GFW response.
The calculators on this website can only really do the ANNUAL distribution, which is calculated at the beginning, and stays the same for every year, except for the first calendar year prorated distribution, and the final stub year distribution options (either the annual distribution, or that amount reduced by the undistributed portion in the intial prorated calendar year).
If you are using the minimum distribution approach, each year’s calculated distribution will be different because it is based upon the previous year-end balance. In this approach the final “stub” year is likewise based upon the previous year-end balance.
2018-10-07 15:22, By: dlzallestaxes, IP: [22.214.171.124]
L4: final stub year
You are asking a two part question.
1) The annual calculation for each year using the RMD method.
Presumably, you are using the single life table which is the best option as it produces the highest annual distribution. When entering the table select your age at the end of the SEPP distribution year. There are no fractions for your age, it is your age as of 12/31.
2) The total amount you must distribute and stub year options.
You have a 5 year plan, so the absolute minimum you must distribute under the plan is 60 months worth. Since you pro rated the first year using x months, you could pro rate the final stub year using 12-x months. For the final year pro rate the full annual amount for that year, not the first year annual amount.
Or you could take a full annual distribution in your final calendar year.
2018-10-08 02:14, By: Alan S, IP: [126.96.36.199]