Medical and SEPP Distributions

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L1: Medical and SEPP DistributionsI am 58, andI started mySEPP distributions in 2003 and recently discovered that there seems to be no ruling on my situation…
1) My distributions for 2003 and 2004 are high based on the new 3 standard calculations 120%PFR and the 2002 standards
2) However, separating and considering my medical costs for ’03 and ’04, I would be in compliance.
Is it possible that I will be ok? What should I do?Does the three year statute of limitations of 3 years on the IRS findings apply?
Thanks
2005-02-07 14:19, By: gg, IP: [129.41.75.66]

L2: Medical and SEPP DistributionsHello gg:
I must be having a really dense day because I don’t understand your posting at all. Try it again & give us some detail.
TheBadger
wjstecker@wispertel.net
2005-02-07 14:25, By: TheBadger, IP: [66.250.23.21]

L2: Medical and SEPP DistributionsMy 2003 and 2004 distributionswere ~$25keach. Under pre 2003 distributions, this was an acceptable amount of ~ 6% due to the performance of the account etc., but based on the 2002 ruling they should have only been~$20k.
Forget my comments about Medical distributions, bc they were over and above this $25k annually.
My question is what should I do from here (choices I have and facts I should face)?
Thanks2005-02-07 15:32, By: gg, IP: [129.41.75.66]

L2: Medical and SEPP DistributionsHello gg:
Now I got it. Didn’t Jesse Ventura coin the phrase: “You’re in a world of hurt?”
On a more serious note, you do have a problem. Options include:
1. Pay the piper (I mean the IRS) approximately $6,000 and call it a day.
2. Seek professional help immediately & take NO distributions in 2005 until this is solved.
All of the above presumes: (a) there were no distributions in 2002; (b) you did not rely upon a professional to set up your SEPP plan originally.
TheBadger
wjstecker@wispertel.net
2005-02-07 15:39, By: TheBadger, IP: [66.250.23.21]

L2: Medical and SEPP DistributionsAbroker did recommend the use of the SEPPsince I needed cashfor living expenses inmy situation2005-02-07 15:56, By: gg, IP: [129.41.75.66]

L2: Medical and SEPP DistributionsA broker telling you to start a SEPP isn’t really professional advice.
If the broker did the calculations, helped you establish the SEPP and charged for it,you may have recourse against the broker.
I do believe that the type of advice the Badger is referring to is having a discussion with a tax professional (like Bill) that may be able to assist or at least offer some advice based on more details that you have offered in your posts.2005-02-07 16:07, By: Gfw, IP: [172.16.1.71]

L2: Medical and SEPP DistributionsHi GG:
We don’t have all of the absolute facts like exact starting date, exact amount, and exact AFR you used, but I do have some ideas to toss out.
1. I’m concerned that your calculations my not have been done exactly right. If you started your distributions in 2003 andused an interest rate of 6%+, I don’t think this is a good rate. Checking the rate chart at the front of this web site, the last time rates broke 6% was 5/1/2002, and before that was 8/1/2001.
2. Interest rates for 72(t) calculations don’t depend on portfolio performance. This performance is used in some hypothetical illustrations to project portfolio growth rates in conjunction with the SEPP distributions. Hypos are ‘best guesses’ and not guarantees of performance. I mention this because you seemed to indicate a belief return was a factor in determining the amount of your required distributions.
3. I fully concur with Bill and Gordon that you need help from a qualified CPA or Enrolled Agent to put together your case for the IRS. Unfortunately I think you are about to write a check to the US Treasury.
Good luck.
Jim2005-02-07 16:15, By: Jim, IP: [70.184.1.35]