not sure last year of SEPP was handled properlly
L1: not sure last year of SEPP was handled properllyI am preparing tax returns for 2014. My husband has been taking $35,000 per year in SEPP for the past 8 years in the form of monthly payments. In looking at the tax documents from his managed brokerage account where all theSEPP transactions occurred, I am now concerned that itmay not have been handled correctly. He received 1/12 of the $35,000 each month so that by 9/28/14, he had received 9/12ths of the $35,000 annual amount. the other 3 payments were made before 12/31/14. However, I see that there are two 1099-R statements for the SEPP IRA. One has $26,249.94 (9 mos) with a distribution code =2. the other is for $8,749.98 (last 3 mos) with a distribution code =7
Each year of the distributions since we started in 2007, have been for the full amount (give a few pennies due to rounding).We started the 72T in 2007, I believe towards the end of the year…like in September and we took the entire $35,000 rather than prorate.
We received a letter in like October that the 72T had been completed satisfactorily…blah, blah.And the standing letter for the monthly withdrawals would expire after 12/31/14….after the last scheduled 72T payment.
Does this sound like it was ended properly? I guess that I was expecting to only get a single 1099-R with the code of 2. Are we okay here or do we have reason for concern?2015-01-18 20:14, By: dillonfan, IP: [188.8.131.52]
L2: not sure last year of SEPP was handled properllyCode 2 denotes that an exception applied — Substantially Equal Periodic Payments (i.e. SEPP.
When your hisband reached 59 1/2, and had taken at least 60 months’ worth of distribution, in effect the SEPP plan ended. Payments after that are “code 7 Regular Distributions”.2015-01-18 21:13, By: dlzallestaxes, IP: [184.108.40.206]
L3: not sure last year of SEPP was handled properllyI agree.
The plan ended in Sept.and he could have stopped distributions for the last 3 months. In fact, if he wants to preserve more of his IRA balance, he could roll the December distribution back into the IRA account. That would reduce your 2014 taxes by removing $2,917 from your income. Thiswill haveabsolutely no effect on his SEPP plan because that plan ended properly in Sept.2015-01-19 00:17, By: Alan S, IP: [220.127.116.11]
L4: not sure last year of SEPP was handled properllythanks for the replies.But, I see now that I neglected to mention that my husbands birthdate is 3/28/55. so that on 9/28/14 is when he reached 59 1/2. the reason for my inquiry here is that I am concerned that he did not take the entire $35,000 annual amount BEFORE 9/28/14. In other words, should he have taken all $35,000 between Jan 1 and Sept 28th?2015-01-19 15:15, By: dillonfan, IP: [18.104.22.168]
L5: not sure last year of SEPP was handled properllyIn a plan such as his that runs longer than 5 years you have 3 options in the final year.
#1 Take nothing at all
#2 Take 9/12
#3 Take the full amount
You are fine the way it has ended.2015-01-19 15:41, By: Scott, IP: [22.214.171.124]