must I use 12/31/2016 account balance as basis for SEPP or can I use 09/20/17?
L1: must I use 12/31/2016 account balance as basis for SEPP or can I use 09/20/17?This is a new SEPP I am establishing for myself- I am 52 years old (06/29/1965) that I hope to begin this October once my Thrift Savings Plan (TSP) is rolled over to Vanguard. My current balance is $635K but my 12/31/2016 balance was only 553K (I had an outstanding loan that I paid off). Can I make my initial distribution using the amortization method based on the 635K amount when I begin my distribution on November 1st 2017 or must I use the 12/31/16 balance which is much lower? Thanks very much for this assistance.2017-09-21 00:02, By: Tina -Lady of Leisure , IP: [188.8.131.52]
L2: must I use 12/31/2016 account balance as basis for SEPP or can I use 09/20/17?You must use a balance from the plan which is funding the 72t plan, ie. your Vanguard IRA.
The 635k will change somewhat before it reaches Vanguard, and you can use the IRA balance as soon as all the TSP funds are received, or the IRA balance on any date after that up to the date of your first 72t distribution. Therefore, the loan and loan payoff does not affect your plan calculation at all.
I would NOT use the last 5 days of a month or the first 5 days for your distributions. If you target 11/1 and it comes out a day earlier then the interest rate you are using may be wrong because you could not use the October rate for an October distribution.Likewise, if you set up periodic distributions on the first of the month, January 1 is problematic because it is a holiday, and the custodian might issue your January payment early, which would put it in December and would bust the plan.
In other words, you need to be certain in which month or year a distribution will be made, so if you plan for a date between the 6th and 25th of the month, there should not be any distributions coming out in the incorrect month.
2017-09-21 01:24, By: Alan S, IP: [184.108.40.206]
L3: must I use 12/31/2016 account balance as basis for SEPP or can I use 09/20/17?First, you must use a “recent” balance, which as usually been defined as within the last 6 months. So you would not be allowed to take 12/31/2016 at this late date.
Second, as Alan said, you could not use the 12/31/2016 balance because it was not in the IRA that you will be using for your SEPP 72-T.
Otherwise, I agree with Alan’s suggestion that you not use any dates early or late in the month for the reasons he stated.2017-09-21 02:50, By: dlzallestaxes, IP: [220.127.116.11]
L3: must I use 12/31/2016 account balance as basis for SEPP or can I use 09/20/17?HI thanks very much for your helpful input. I really appreciate the expertise on this website.2017-09-21 22:41, By: Tina -Lady of Leisure, IP: [18.104.22.168]