First year catch-up

L1: First year catch-upWe are currently in our first year of 72t distributions. We did not take the maximum allowed. We are told that we can adjust in year one to get more money from our accounts as long as we don’t go over that annual max amoutn and that we CANNOT change it after year one. From reading what’s on this website, it sounds like no adjustments are allowed. Can anyone help me get the real answer on this one? 2002-01-14 15:09, By: TLD, IP: [127.0.0.1]
L2: RE: First year catch-upSorry. Once the plan is implemented, there are no changes allowed. The calculated payment is the amout that should be distributed – no more and no less Good luck!2002-01-14 15:16, By: Gfw, IP: [127.0.0.1]

L2: RE: First year catch-upGFW- if I have not gone past my year mark, i have not established what I will be taking annually… I have always heard year one was adjustible but don’t dare try it after that year mark of the first distribution.2002-01-14 15:34, By: tld, IP: [127.0.0.1]

L2: RE: First year catch-upFirst let me say that I have never heard of the 1st year thing nor have I ever seen it addressed in any PLR that I’m familiar with.When the plan is initiated, the scheduled payment is calculated based on an interest assumption (typically derived in the month the first payment is made) and mortality based on your age in the year when the first payment is made. If the plan (which should be in writing) calls for an annual payment, then the payment should be made annually. If the plan calls for a monthly payment, then equal payments should be made monthly. You won’t find the answer that you are looking for about changing the payment in the first year because it doesn’t exist. Sounds like you may have received some bad advice or misinterpreted the advice that you received.2002-01-14 15:46, By: Gfw, IP: [127.0.0.1]

L2: RE: First year catch-upSo, if I don’t start the distributions until July in a particular year, do I have to devide the annual amount by 6 for the first year to get a monthly payment for the first year only?Great site!2002-01-15 22:28, By: Kimmer, IP: [127.0.0.1]

L2: RE: First year catch-upYou always divide the annual by 12 if you are taking monthly payments. If you start in July, you would take 6 (July to December) monthly payments. 2002-01-16 18:58, By: Gfw, IP: [127.0.0.1]

L2: RE: First year catch-upI’m sorry but I am still confused. If the IRS says the annual payments must be substantially equal then it would seem that if I only take 6 monthly payments the first year (having started in July) then the first annual payment will only be half the usual annual amount. Won’t this trigger a penalty?Kim2002-01-20 12:18, By: Kimmer, IP: [127.0.0.1]

L2: RE: First year catch-upYou talk about calculating an annual payment. In order to be substantially equal, you would take 6 monthly payments in 2001 and the other 6 payments in 2002. The annual payment would span July to July.I’m guessing that you have nothing in writing outling how the payment was calculated, what account balance was to be used or even what interest rate and mortality factor was used. If this the case I suggest you seek advice from your own legal/tax counsel. 2002-01-20 12:46, By: Gfw, IP: [127.0.0.1]

L2: RE: First year catch-upOK. I think I understand now. I was considering the annual payment requirement with respect to the calendar year since that is what is normally used for individual taxpayer calculations. (I think you mean July to June). I have all of the other information you talk about and have calculated the payment. There just seemed to be some general confusion on the first year payout.Thanks for your time.2002-01-26 11:00, By: Kimmer, IP: [127.0.0.1]