monthly sepp disributions

L1: monthly sepp disributionsIf I start a SEPP in mid year at age 54 (amortization method) and set up annual disributions under 12 equal monthy automatic payments, do I have to take a full annual distribution during the first “partial” calendar year, or can I just take equal monthly payments (annual distribution divided by 12) from SEPP inception every month until reaching age 59 1/2?2010-06-11 21:14, By: Bill, IP: [65.242.130.59]
L2: monthly sepp disributionsYou can take a full year of payments for the year in which you start your SEPP or you can take monthly payments. You can choose either of these options. If you do have a “stub year” to deal with, then you should pay close attention to your 1st modification date. There is a calculator on this web site that can compute the date when your SEPP ends and you can safely modify your withdrawals without incurring the 10% penalty.2010-06-11 21:28, By: Ed_B, IP: [71.236.183.224]

L2: monthly sepp disributionsAs Ed stated, you have a choice of SEPP distribution amounts in the first year. One way to use this to your advantage is to start the monthly payments from the beginning, but in December do another analysis of whether you think the amount you are getting will be enough to get you through the full SEPP period. If you are not real sure, you can buy some insurance against falling short by taking a one time distribution in December for the number of months in your first year prior to your starting month. That will provide you with a penalty free full annual distribution the first year and some cash to set aside to supplement your later year SEPP distributions.There is another small advantage to electing the full annual first year amount. When you reach your final stub year, you will already have taken out 60 months worth of payments. That sets up the option in your final stub year to take out nothing prior to your modification date, essentially saving the extra amount you took earlier. Note that this does NOT CHANGE your modification date in any way, it just creates an added option in that final stub year.Twoother caveats:1) In your first year, the only options you have are either the full annual or pro rated by the month. You cannot take out some number in between. Therefore in December the additional distribution can only be forthe amount needed to bring your annual total up to the exact full annual dollar amount.2) For your monthly payments, it is best to set them for for early in the month, no later than the 10th. That gives you time to correct any errors in December by either taking a supplemental distribution OR if you have gone over for some reason to do a corrective rollback of the excess.2010-06-12 00:01, By: Alan S., IP: [24.116.165.60]