Informing Custodian of SEPP

L1: Informing Custodian of SEPPAfter studying up on SEPPs for three years, I am about to initiate one. My emphasis is on simplicity. It will be based on a single IRA account and no recalculation so my annual withdrawal amount is fixed for the duration of the SEPP. I plan on two withdrawals per year (March and September) which I will initiate manually. This puts me in the position of full control and responsibility for getting the withdrawals done for the correct amounts and within the calendar year

Given that my IRA custodian will not code any 1099 with a 2, and is not responsible for any automated withdrawal, is there still any value in informing the custodian of my SEPP and supplying documentation? It won’t change the 1099 coding, so I will have to file Form 5329 in any case. How does it help me in this situation if the custodian knows I have established a SEPP?2007-01-21 08:36, By: Jreb10, IP: [64.122.87.19]

L2: Informing Custodian of SEPPIt may or may not help depending on the competence of the custodian. Some may want to assist you by checking your figures etc or marking their record that you have a 72t plan so that they could warn youshould you request something inconsistent. But you appear to have this under good control without any help from a custodian, particularly if you have confirmed they will not provide the 1099R exception code for the 72t. You would have to make a judgement whether the custodian is up to speed on 72t plans or not. Some large custodians like Vanguard may be helpful even though they may refuse the exception coding. For some others you would be better off not telling them, although being a thorough as you are, you probably would not tolerate such a poor custodian for very long.2007-01-21 14:04, By: Alan S., IP: [24.116.66.98]

L2: Informing Custodian of SEPPGood morning Jreb:
My suggestion is to set up automatic distribution by your custodian in March and September, then set up reminders for yourself to monitor that it is done correctly. Here are my reasons:
1. Non-IRA account distributions may be processed by a phone call to the custodian; IRA accounts require paperwork to process distributions. So unless you set up auto distributions from the IRA, you will have to process a new form each time … March and September. Assuming you will only need 10 distributions for the 5-year minimum time, then you have 10 opportunities for things to get screwed up because a human has to handle it each time.
2.I haven”t seen every custodian”s forms but all that I have dealt with require checking a box for the reason forthe distribution … Normal, Early, Disability, etc. Likewise, if you are using 72(t), there is a box for this option, and they will probably require systematic distribution using their automatic system. Check with your custodian but I think you will find that you will not be able to avoid notifying them that you are setting up a SEPP Plan by virture of the information you provide on the distribution forms.
3. If you try to do it manually per your description, then you are setting yourself up for making your own human errors, like forgetting or maybe being in a car wreck and unable to process the forms before the year ends.
If you use the custodian”s automatic system for distributions, you are not losing control because you are monitoring for errors, and you will have time to get things corrected before year end.
Jim2007-01-22 08:35, By: Jim, IP: [70.184.2.72]