L1: last distibution
We set up 72t distributions back in 2006. My husband’s is rapidly coming to an end and we have a couple of questions. The account used was a 5yr CD in a credit union with monthly payments arranged no problems there. The CD matures next week (31May) and in looking at the calculators we need to take at least one (June) and possibly two more distributions (July). Two questions; 1) Can the balance of the account, less that required for the distributions be transferred out of the credit union before the first modification date or does the account need to stay whole? 2) What would be the last distribution required, June or July? Thanks in advance for your help.
Notes: Age on 1st payment date 55 5-yr period ends – 7/13/2011
Date age 55.5 – 5/27/2011 First Payment Modification Date – 7/14/20112011-05-26 16:45, By: Serenity, IP: [22.214.171.124]
L2: last distibutionQuestion… have you distributed the planned monthly amount times 60?
Example if planned monthly distribution was $1,000, have you distributed $60,000? If not, what month will that distribution occur?2011-05-26 17:08, By: Gfw, IP: [126.96.36.199]
L3: last distibutionFirst monthly distibution was 7/13/06. July-June each year would be 12 x 5 years would put June 2011 as payment # 60.
Notes:5-yr period ends – 7/13/2011 First Payment Modification Date – 7/14/2011
Date age 55.5 – 5/27/20112011-05-26 17:18, By: Serenity, IP: [188.8.131.52]
L4: last distibutionCan it be transferred? Yes, but why not wait until the plan ends? They would probably dump into a passbook account until you are ready to move the dollars.
Based on the information that you provided, the June payment would (complete 5 annual distributions and) be the last required payment – then don’t make any changes, additional distributions, etc until 07/142011-05-26 17:34, By: Gfw, IP: [184.108.40.206]
L5: last distibutionJune was my guess as the last distribution – I got a little confused with the modification date a month later. They will put it into some kind of an account for as long as we want. Our thought was to get it to where we can invest it as soon as possible. We were lucky at the time with a 6.25 rate. Now, not even close. If it is better to leave it in the same institution until 07/14/2011 then we can do that. Is that what you would recommend?
Again thanks, your site now as was the case 5 years ago is a great resource!2011-05-26 17:50, By: Serenity, IP: [220.127.116.11]
L6: last distibutionI would definitely wait until after 7/15/2011 to move any money out of where it is at.
This would avoid any issues with “partial transfers” that IRS might want to address if there is more than 1 transfer from the account within any 12-month period. It is not worth the possible exxposure for a couple of months, and a small amount of investment income. Any professonal fgees to fight or defend your action old exceed any income that you could generate.2011-05-26 18:05, By: dlzallestaxes, IP: [18.104.22.168]
L7: last distibutionWell, you have to do something if the CD matures in May. Youshould ask for a new CD IRA account number for the 60 day CD. The CU should handle that as a non reportable same trustee transfer to the new CD IRA.
When the current CD expires, take out enough cash to pay the balance of your 6 months of distributions for 2011 (last monthly payment would have been June). Then set up the 60 day CD to pay interest ONLY at maturity, which is after your SEPP mod date. At that point you can roll over the IRA wherever you please or take whatever distribution you want. But the IRA account number for which your 1099R is issued will be the same as prior years, and any other 1099R they issue will be under the new account number andapply to distributions after the mod date. Or better yet, the current CD will generate your only 1099R for the year. Less reporting complexity on your 1040.
Also – noted that the max rate for 7/06, age 55was enough to generate a greater distribution than the CD would generate. That means that you probably used a lower interest rate than the max to match up to the CD monthly interest payments?
2011-05-26 18:30, By: Alan S., IP: [22.214.171.124]
L8: last distibutionCD matures today – the credit union will put into a 6month cd and pay the June distribution (Final # 60 from the 72t schedule) and then in July after the modification date let us transfer the funds out with out penalty. We plan to leave 6 months of expenses there and get montly distibutions changing the date to be after the modification date. This should give usone 1099-R from the CU for the year and we should be fine. Anything I am missing? thanks2011-05-31 19:48, By: Serenity, IP: [126.96.36.199]