L1: New seppDate of birth 08/02/1960
a couple of questions want to start a 72t in july 2016
first the interest rates on your calculator is it already 120% of rate or do I have to calculate the 120%
got laid off in November got 60 days to rollover to Ira company does not want to deal with separation of service for 55 over rule no company stock involved
when would the beginning balance be end of 2015 or sometime in 2016
next I would take the first distribution in July when can I take the next one Jan 2017 or would have to wait till July 2017 I going to take it annually
next I will be 59 and half February 2020 would that be the last year I have to take a payment
next if I get my disability do l have to continue the plan or can I stop
thanks2015-11-16 12:48, By: Coal miner, IP: [126.96.36.199]
L2: New sepp1) The site calculator interest rates include the 120% factor, so no further adjustment applies.
2) I don’t understand your comment regarding age 55 separation. If you will meet the criteria, the only reason you would still need a SEPP is that your plan will not offer annual distributions till you are 59.5. If they will allow you to take at least one annual distribution, you would be better off to leave the funds there and avoid the risks and rigidity of a SEPP. Possibly an exception if the plan has awful investment options and very high costs.
3) If you still need a SEPP, your initial balance for a July inception should be within 4 months or so, but should also be a reasonable representation of the IRA balance at the time youtake the first distribution. Certainly, your calculation balance should not be more than 15% higher than the current balance as that would risk the IRS considering your opening value as not reasonable. With respect to the 12/31 balance, you would probably be OK, but more than 6 months old could be risky.
4) Your July distribution and additional distributions in 2016 can be either the annual total or 50% (pro rate by month) of the annual total. Your distribution pattern in later years does not matter. Your annual distribution as shown on the 1099R must be exactly equal to your calculation. You could therefore take the 2017 distribution is January, but if so your budgeting needs to be accurate.
5) Your plan ends (modification date) in July, 2021 after 5 years. You will have a 5 year plan and you must take out at least 5 years of distributions. If you take full annual distributions, with the last 4 in January, your last distribution will be Jan, 2020. But then you CANNOT take another distribution till August, 2021, over a year and a half later. You might be better off to just take monthly distributions from the start for 60 straight months. You will then be receiving funds consistently, and the last 17 or so payments would be distributed after 59.5, so if you ever busted the plan or the calcs were wrong from the start, you would only owe penalties on distributions you took prior to 59.5, not all your distributions as would be the case for your January lump sum plan.
6) With respect to disability, it must comply with the disability definition of Sec 72(m)(7). If so, suggest that you get a letter from your MD to that affect, send it to your IRA custodian and request that they show code 3 on the 1099R for all distributions after the disability effective date, which might well be prior to notice of the determination. Your plan will have automatically ended on the effective date of the determination. “Coal miner” disability claims are not likely to be questioned if lung related, otherwise I would play it safe and not break your plan unless you are sure the disability complies with the permanent or long lasting nature cited in the code section. If your plan ends, then you do not have to complete it and can take any distribution amount you wish penalty free under the Code 3 exception.
2015-11-17 22:56, By: Alan S, IP: [188.8.131.52]