Initial balance to use for minimum distribution method
L1: Initial balance to use for minimum distribution methodUsing the minimum distribution method,how do I determinethe initialbalance if I’m starting the 72t plan at the end of the year? Most seem to usethe balance from the end of the prior year, but I’m concerned about a 12 month gap between the valuation and the withdrawal.
I plan to take my firstdistribution at the end of 2015, and then a second distribution at the beginning of 2016, using the 2015EOYbalance to determine the 2016 distribution amount. 2015-12-27 13:22, By: Big, IP: [22.214.171.124]
L2: Initial balance to use for minimum distribution methodLOTS OF LUCK trying to start a SEPP 72-T plan this late in the year. I doubt if any financial institution will be able to get it done this last week of December. They are usually short staffed, and may have only 1/2 day on 12/31. If you insist on doing it anyway, be prepared for possible errors, and that it doesn’t get done for 2015. Why did you wait so long to get started ?
In answer to your question, you would use the highest balance since 6/30/2015, not 12/31/2014.2015-12-27 18:37, By: dlzallestaxes, IP: [126.96.36.199]
L3: Initial balance to use for minimum distribution methodI was taking a year end lookat my taxes and discovered I might need some additionalincome this year to take advantage of anon-refundable tax credit. Really, we’reonly talking a few thousand dollars, so I’m probably better off just taking a premature distribution this year, eating the penalty, and starting a real 72t plan next year.
2015-12-28 01:30, By: Bjg, IP: [188.8.131.52]
L4: Initial balance to use for minimum distribution methodIf you don’t actually need the money, but want to leverage the tax credit, you should do a Roth conversion, not a 72t plan. You would still have to get on this tomorrow because you will have to open a Roth IRA account if you do not already have one. Then process the conversion immediately being sure to decline any withholding on the TIRA distribution. There is no penalty to do a Roth conversion, and in your case no taxes either if you control the amount you convert. However, if your credit is the Savers Credit, then your conversion will affect the credit and could reduce or eliminate it.
Do you have some other reason to start a 72t in the future?2015-12-28 02:05, By: Alan S, IP: [184.108.40.206]
L5: Initial balance to use for minimum distribution methodThe Roth conversion is a great idea. Thanks.
I amplanning to start a 72t plan next year.2015-12-28 04:39, By: Bjg, IP: [220.127.116.11]