New Amortization SEPP
L1: New Amortization SEPPI am beginning a new SEPP after reading the FAQ’s, plan pointers, and this website/forum I believe I have done it correctly. Comments are appreciated. Thanks.
Single Life Expectancy
Pro-Rate (stub year) first year
Account balance using March 31, 2014 IRA Statement: $375,382.75
First payment/plan start date: May 15, 2014
Interest Rate, IRS Published Mid-Term Rate, April 1, 2014, 2.17%
Annual Distribution: $15,661.64, divided by 12 = $1,305.13. Stubyear- 8 payments of $1305.13 = $10,441.04 but by the calculator the annual would be $10,441.09.
For a full year monthly payments will equal $15,661.56. I assume the few pennies each year won’t be an issue, but I could take an additional 8 cents (5 cents this year) with my final December payment each year to get the exact number if it would be adviseable?
For my documentation, I have used the sample SEPP document on this website to make my own document, printed the IRS Published April Interest rates, printed a copy of my March 31, 2014 IRA Statement, a copy of the 72T website calculator calculations and the IRS FAQ for 72T plans. I want to make sure I have all my ducks in a row in case I have to deal with the IRS. Being a retired FED, (not IRS) I know how the system works. 2014-04-25 13:35, By: Kaufmanrider, IP: [126.96.36.199]
L2: New Amortization SEPPNot that it’s significant, but $ 15,661.64/12 = $ 1,305.14 when rounded off correctly, which would be $ 10,441.12 for the 8 payments.
As you know, you are allowed to take the full $ 15,661.64 instead, in whatever way that you want to. If you do not need the money monthly, you could take 4 payments of $3,915.41 if you wanted to come out to the penny.
If you want to take monthly payments, and want to be exact, I would adjust the first payment, and not the December payment, so you can set it up better for automatic monthly payments by the custodian, and not have to worry about remembering to change the Dec payment.2014-04-25 13:49, By: dlzallestaxes, IP: [188.8.131.52]
L2: New Amortization SEPPAll of your calculations look about right. Should you take the cents? I would, it won’t complicate anything.
It appears that you are on the right track. Just keep good documentation as the plan goes forward.2014-04-25 13:57, By: Gfw, IP: [184.108.40.206]
L3: New Amortization SEPPThanks for the comments. I opted to round the cents down rather than up because I didn’t want to go over the annual amount, even by a penny. Figured it would be safer to be receiving the exact amount or a few cents under. I’ll probably do the December extra pennies just so my annual 1099 shows the exact amount I have in my plan documentation.
I thought about annual, sem-annual, quarterly but for me monthly will be the easiest.2014-04-25 17:15, By: Kaufmanrider, IP: [220.127.116.11]
L4: New Amortization SEPPQuestion, I have been taking payments monthly since May 15. My original plan was to pro-rate the first year over 8 months (May-Dec). However, a situation has come up and I’d like to give my son some money to help with medical bills. I think the first year I can take a pro-rated of full distribution, but since I started doing monthly withdrawals can I increase the distributions amount for Aug-Dec so that I will take the full calculated annual distribution for 2014? I’ll adjust my 72T plan paperwork/documenation to reflect a full distribution paid monthly over the 8 months.
In 2015 I’d change back to the appropriate monthly amount (full year divided by 12) for the entire year.
Thanks,2014-08-11 23:03, By: Kaufmanrider, IP: [18.104.22.168]
L5: New Amortization SEPPNo problem adjusting 2014 to a full annual amount, and no required pattern as long as by 12/31 you have distributed either 2/3 the annual or 100% of the annual calculation. You can also change your pattern in subsequent years as long as the full annual amount is distributed. Best to check back at the time regarding your options in the year you reach 59.5, as things could change by then.
2014-08-11 23:24, By: Alan S, IP: [22.214.171.124]