final year distribution
L1: final year distributionExisting SEPP, 2-11-63 DOB, 6-10-15 first distribution.
I have taken a stub year for 2015. It will be August of 2022 when I reach age 59.5
The SEPP calculator shows that my calculated Total Distribution will not be complete until December of 2022.
My question is do I need to take my Total Distribution by age 59.5 or is it OK to let it run to the end of the year?
I am aware that I can continue the same monthly distribution once I meet my first Modification Date.
I believe that as long as I show that my distributions for that final year are the same as the previous years distributions, I do not need to have all of my calculated Total Distributions completed by age 59.52015-11-19 17:22, By: jiyuu, IP: [220.127.116.11]
L2: final year distributionPerhaps you entered a date incorrectly in the calculator, but your SEPP plan ends at 59.5 on 8/11/2022.
Your options for your final year through 8/11/2022are:
1) Take out nothing
2) Take out a full annual
3) Take out 7/12 of your annual calculation.
So you have 3 choices. After 8/11/2022 to yearendyou can also take out as little or as much as you wish since your plan has ended andyou are over59.5.2015-11-20 03:49, By: Alan S, IP: [18.104.22.168]
L3: final year distributionThanks for the reply Alan. I have checked the dates and they appear to be correct. My DOB is 2/11/1963. My plan ends as listed on the calculator on 8/11/2022 at 59.5
The calculator shows that my total distribution for the plan is X.
In order to make my total distribution for the plan to equal X
I have two options.
Make my final year a stub year and increase my monthly payments for the last 8 months and take no more distributions for the remainder of the year.
Or take my normal monthly distributions for the entire year making making my total distributions equalling X.
My question is do I need to have my total distributions equal X by my end of plan date 8/11/2022 (Option 1 above) or as long as I have attained my total distribution X by the end of the year (Option 2 above)?
I apologize because I may not have asked the question correctly in my previous post. I hope this post makes my question clearer. Thanks again.2015-11-20 14:21, By: jiyuu, IP: [22.214.171.124]
L4: final year distributionAlan listed 3 options, so I do not understand why you think there are only 2 options.
You did not include his option for you to take 7/12 of your annual distribution, nor did you include not taking any distribution.
Under your 2nd option, any amount taken after 8/11/2022 doesn’t matter because your SEPP 72-T plan automatically terminates on 8/11/2022.
You should read more of the many postings about the final stub year in order to better understand what your options are.2015-11-20 19:16, By: dlzallestaxes, IP: [126.96.36.199]
L5: final year distributionjiyuu, what calculator are you looking at that shows a total dollar distribution for the entire term of a plan?2015-11-21 01:54, By: Alan S, IP: [188.8.131.52]
L6: final year distributionI am using the one on this site. It is located in the comparison of Plans section and is what I believe the annual distribution is based on. Based on the calculators Initial Annual Distribution starting on 6-10-2015 (stub year) and the Annual Distributions from 2016-2022 the Total Distribution will be fulfilled by taking my last distribution on 12-10-2022. That is the part I am concerned about. I would think that the calculator would have had my last distribution to be made on 8-2022 when I attain age 59.5? Adding all the monthly distributions up to attain the Total Distribution of the plan I have to take the calculated distributions all the way through 2022. Thanks for hanging in there with me Alan.2015-11-21 13:11, By: jiyuu, IP: [184.108.40.206]
L7: final year distributionHere is what I get based on your original post…
Date Age 59.5… 8/11/2022 5 Year Date… 6/10/2020 1st Modification Date… 8/12/20222015-11-21 14:27, By: Gfw, IP: [220.127.116.11]
L8: final year distributionOK – I see where your question arises. The total distribution assumes that the final year will require a full annual distribution and does not address the other two options. You can select first year pro rating if you want and it will reduce the total plan and first year distribution amount to reflect that, but other than a full annual, there are no other final year options reflected by the calculator.
gfw can probablyexplain this calculatorissue, but your question is a good one. The other two options should still be valid, but whichever of the options you choose, the correct distribution for the year would have to be completed prior to 8/11 because distributions after the modification date do not count with respect to the plan. If you took out monthly distributions for the entire year, you would effectively be pro rating the final year. If you pro rated it, I am not aware of the IRS making an issuewithrespect towhether your final distribution is in July (7 months worth) or August prior to the8/11 moddate(8 months worth). I think July is technically correct if your first distribution occurred in August and the plan ends before August ends.2015-11-21 19:21, By: Alan S, IP: [18.104.22.168]
L9: final year distributionAlan, yes you understand my concern/question. I agree, I do not believe it is a calculator issue (with the exception not of having the option to make the final year a stub year.) I think it may be safe to increase my final year monthly distribution from Jan 2022 through August 2022 at 59.5 to attain my total distribution amount according to the plan and then I can stop, increase or continue my monthly distributions for the remainder of 2022. To be extra safe I may choose to not take any further distributions from the plan for the remainder of 2022. Thanks again for the input. Have a great Thanksgiving.2015-11-23 16:50, By: jiyuu, IP: [22.214.171.124]
L10: final year distributionIn the final year, you do not have to increase your monthly distributions to get the full annual amount. You are only required to distribute the prorated amount. Or you are allowed to take the full annual distribution BEFORE reaching your ending date.
Anything that you take after your ENDING DATE have nothing to do with your SEPP 72-T plan, because your plan TERMINATES as of the later of 59.5 or 5 years.2015-11-23 18:38, By: dlzallestaxes, IP: [126.96.36.199]
L11: final year distributionThanks dlz. I guess the “Total Distributions” amount that the calculator shows is Just stuck in my head. Since the Total is what the Annual Distributions are based on I would think that I would need to have that total amount distributed within the life of the plan. My annual distribution is $9389. My Modification date is in August. I understand your statement “take the full annual distribution BEFORE reaching your ending date.”
“Prorate” to me means $9389/8? Is that correct? If I do that I would fall short of the (here it is again) the plans Total Distributions by 4 months of my current monthly distributions.
I will make sure I take my annual distribution amount prior to my end date. Thanks again for your input. Happy Thanksgiving2015-11-23 20:12, By: jiyuu, IP: [188.8.131.52]
L12: final year distributionYou will not be 4 months short since you will have taken them in your first prorated year.
If you took a 100% distribution on your first short year, then you will have taken 5 full years of distributions in the first 52 months, and would have an option in that 6th calendar year.2015-11-23 20:18, By: dlzallestaxes, IP: [184.108.40.206]
L13: final year distributionThanks for your patients dlz. My communications may not be as clear as I would like them to be in this forum?
I made my first year a stub year starting on 6-10-15
The total distributions listed on the calculator is $71196.50
My modification date is 8-12-22. From 6-10-15 through 8-12-22 is 87 months.
The calculator states that my annual payment is $9389 and my initial stub payment was $5477
$9389/12=782.42 (monthly distribution)
$71196.50/87=818.35 (Monthly distribution)?
The calculator based on the Total Distribution and Annual Payment spread the distributions out for 91 months ending on 12-12-2022
It appears that I need to take my annual distribution of $9839 for 2022 over the 8 months remaining on my plan in order to collect the Total Distribution of $71196.50
2015-11-23 23:02, By: jiyuu, IP: [220.127.116.11]
L14: final year distribution2015 = $ 5,476.94 = correct ( $ 9,389/12 = $ 782.42 x 7 ) You could take $ .06 less in Dec. to be exact, i.e. $ 782.36 rather that $ 5,477.00
2016 – 2021 = $ 9,389.04/ year to be exact, but $ 9,389.00 is ok. = $ 56,334.24 for 6 yrs
2022 = $ 6,259.36 for 8 mos. @ $ 782.42
I don’t understand why the Calculator showed 7 years (2016-2022) plus the 7 months in 2015. It appears to be 4 months too long.
The total will be $ 68,070.54 ( $ 5,476.94 + $ 56,334.24 + $ 6,259.36)
The difference is $ 782.42 * 4 = $ 3,129.682015-11-24 01:34, By: dlzallestaxes, IP: [18.104.22.168]
L15: final year distributionThe calculator I am looking at does not address either the inception year options OR the final year options. It assumes a full annual distribution for both the first and final years. This is apparently for illustration purposes to eliminate all the other combinations that can occur for both those bookend years. As such, many plans that are perfectly legal will result in a lower total distribution than the total shown in the comparison section.
You still have 3 options for your final year, but if you feel better taking the full annual out prior to the mod date that is certainly one of the options. It is probably also better to avoid distributions both before and after the mod date because that will trigger two 1099R forms, which would increase your tax reporting work somewhat.2015-11-24 03:26, By: Alan S, IP: [22.214.171.124]
L16: final year distributionAl, for thecalculator on this site the very last data input option at the bottom allows for a 1st year prorate. I chose to prorate the first year. The Total Distribution amount in the Comparison section matches the Year by Year Analysis Annual Payment so the $71196.50 should be correct?I am a bit confused with the statement “It is probably also better to avoid distributions both before and after the mod date”? I will need to take my Total Annual Distribution for the 2022 year prior to the Mod date. I agree it would be good to not take any distributions after the Mod date. This would show the Annual Distribution for 2022 was the same as the previous years of the plan. You may have readdlzallestaxes post prior to yours. You also mentioned gfw may be able to see if there is an issue with the calculator. Would it be a good idea to notify gfw? Thanks again.2015-11-24 03:58, By: jiyuu, IP: [126.96.36.199]
L15: final year distributionI agree with your review of the math. You found the discrepancy that I found as well and is what has caused my confusion. Al just posted as well and supplies his potential explanation.
I have used other calculators and they havecome up with $9389/year as well.
Al mentioned gfw may be able to explore an issue with the calculator. Would it be a good idea to notify gfw?
Luckily I should not have to address this issue until 2022 but I would like to find a resolution. Thanks2015-11-24 03:40, By: jiyuu, IP: [188.8.131.52]
L15: final year distributionGood morning. After reading Gfw and Alan’s posts following your last post do you still think that the total distribution at the end of my plan (8-2022) is still $68,070.54 or the total distribution stated on the calculator $71196.50? After reading many post on the site I see that you, gfw and Alan are very active in replying to posts. I truly value the opinions you all have. I see why there are so many questions in regards to SEPP. Just vague rules and instructions are difficult to interpret.2015-11-25 17:46, By: jiyuu, IP: [184.108.40.206]
L8: final year distributiongfw I did not realize it was you that made this post. I thought it was from Al. I agree with the data you came up with. It is the data that I have on my calculator results. If you could read the remaining posts you can see that their is question that we have all not fully answered. It appears that in order for me to take my Total Distributions based on the calculator results, the calculator has my final distribution for 12-12-2022 althoughmy Modification Date is 8-12-2022. Your thoughts would be greatly appreciated. The two other posters to my question have been very helpful.2015-11-24 04:09, By: jiyuu, IP: [220.127.116.11]
L9: final year distributionThe calculator’s main function is to calculate distributions based on Rev. Rul. 2002-62, to provide an analysis of the results of choosing one method over another and to show the date when the SEPP plan may end.
The calculator projections after the first year are provided for illustrative purposes only – the last year is always shown as a full year on an age 59.5 plan. It was never designed to give every alternative every year.2015-11-24 10:32, By: Gfw, IP: [18.104.22.168]
L10: final year distributionThanks Gfw. Have a happy Thanksgiving2015-11-24 12:02, By: jiyuu, IP: [22.214.171.124]