Help with calculations
L1: Help with calculationsHi,
I intend to start annual 72T SEPP distributions from my IRA, with the very first annual payment beginning on Feb 15, 2013. Then I plan to take an annual distribution Feb 15th of each subsequent year after 2013.
Account balance as of Dec 31, 2012: $600,005.21 (should I leave off the 21 cents from the calc ?)
DOB: Feb 28, 1959
Spouse DOB: Jan 30, 1962
SEPP Method which I think produces highest amount: Amortization
SEPP Interest Rate: 1.140
Uniform table: No
Joint table: No
The highest amount that the calculator produced for me was $23,400.93.
Q1) Can you confirm if I computed the annual distribution amount correctly ?
Q2) Is the 1.140 Interest rate firm (as long as I take my distribution in Feb 2013) ?
Q3) My IRA is with Fidelity, and in terms of the process, would I simply submit a request for a SEPP distribution of exactly $23,400.93 by Feb 15th ?Q4) As long as I pull out exactly $23,400.93 each year in February, am I following the IRS rules appropriately (to avoid busting the SEPP plan).
Q5) Any advice on what kind of backup documentation I need to keep(especially in case I have to provide to the IRS or my tax person).
Thank you for your help. This website and the folks providing advice have been a lifesaver.
2013-01-04 06:38, By: EarlyOut, IP: [22.214.171.124]
L2: Help with calculations#1 Yes
#2 Yes, unless the Febuary rate is revised upward.
#3 My account is with Fidelity. I just have it setup to do direct transfer to the bank my checking account is with. No real need to tell them it’s a SEPP, because they’ll code the 1099 as an early distribution, and you will file a IRS form 5329. The SEPP is between you and the IRS. After your initial withdrawal 2013 you may take funds at any time throughout the year as long as the amount is the same.
#4 Yes, but as stated above it doesn’t have to occur in the same month as long as annual distributions are the same.
#5 See the Planning Pointers page found at the lower left on the home page. Click on sample form to see what you will need.2013-01-04 16:01, By: Scott, IP: [126.96.36.199]
L3: Help with calculationsThanks for the reply to my questions
2013-01-04 16:17, By: EarlyOut, IP: [188.8.131.52]
L4: Help with calculationsYour max rate is 1.14. Even if the Feb rate is higher, you cannot use that rate if your first SEPP distribution is distributed in Feb. But you could wait till the beginning of Feb to see if the Feb rate is higher, and if so you could delay the start of your plan to March to get the higher rate. You can still withdraw the full annual so this would only amount to a one month wait to get the payment.2013-01-04 18:20, By: Alan S, IP: [184.108.40.206]
L5: Help with calculationsThanks Alan for the correction. I failed to remember this:
two months immediately preceding the month in which the distribution begins.2013-01-04 20:00, By: Scott, IP: [220.127.116.11]
L5: Help with calculationsAlan, I like your plan…It might very well be worth the wait until the February rate is released around the 20-25 of February.
If I look at the treasury rates trendshttp://72t.net/72t/InterestRates/Treasury/Trends- rates are trending slightly higher.
If I then take a look at the Estimated SEPP Rate for Februaryhttp://72t.net/72t/InterestRates/Estimated/AFR/Mid-Termwith only 7 days left in what we believe is the calculation period, the rate appears to be on the rise.2013-01-05 10:28, By: Gfw, IP: [18.104.22.168]
L6: Help with calculationsGordon,
Did you mean the Feb rate will be posted the 20-25 of January?2013-01-05 17:28, By: Alan S, IP: [22.214.171.124]
L7: Help with calculationsAlan… Thanks for the correction – the Feb rate will be published around the 20-25 of January. I had some back surgery and I guess my miond isn’t back as far as I thought2013-01-05 18:18, By: gfw, IP: [126.96.36.199]