Piecemeal 72T

L1: Piecemeal 72TI originally retired at 55, leaving my retirement deferred and took my 401k. I began SEPP (from the 401K) the following year. THEN I had need of the retirement funds so I took those last year. I recalculated and am getting SEPP payouts reflecting the combined funds. I will be 59.5 in August, and from yet another source will be getting further retirement funds. Must these funds be added to the SEPP if I want any funds paid out from them? Should they be combined and completely recalculated? And does this end at the end or the 5 years point from which I first calculated, or does it extend my SEPP for two more years?2010-02-05 20:13, By: PH, IP: [216.80.125.206]
L2: Piecemeal 72T>>I recalculated and am getting SEPP payouts reflecting the combinedIf I am reading your post right, you have already busted your SEPP Once established, no additional funds may be added. You could have a secondSEPP, oreven a third. But when you added additional funds to the existing planand recalculated, you busted the plan.At this point, my suggestion is that you find very competent tax counsel -you probably have a problem.2010-02-05 20:21, By: Gfw, IP: [216.80.125.206]

L3: Piecemeal 72THmm..That WAS the advice I was givenand also what I believe I just read on this site that you HAVE to include additional rollovers or you are limiting /manipulating the calculation. Very confused now..2010-02-05 20:30, By: PH, IP: [216.80.125.206]

L4: Piecemeal 72TYou didn’t read it on this website, or in this forum. Here is (bold and color added)…Rev. Rul. Section 2.02(e) Changes to account balance. Under all three methods, substantially equal periodic payments are calculated with respect to an account balance as of the first valuation date selected in paragraph (d) above. Thus, a modification to the series of payments will occur if, after such date, there is (i) any addition to the account balance other than gains or losses, (ii) any nontaxable transfer of a portion of the account balance to another retirement plan, or (iii) a rollover by the taxpayer of the amount received resulting in such amount not being taxable. 2010-02-05 20:45, By: Gfw, IP: [216.80.125.206]

L2: Piecemeal 72TYou are stating here that you took your distributions directly from the 401k plan and say nothing about an IRA rollover.If you separated from service in the year you turned 55 or later, and that appears to be the case here, you never needed a SEPP in the first place because you qualified for the age 55 separation exception from the penalty.Your 1099R for these distributions should show code 2 in Box 7. If so, you have no problem, but you may need to send in 5329 forms to amend your claimed exception if you changed prior coding to an “02” (SEPP). If you did that, then you must amend these to an “01”. If confused, see Inst for Form 5329, p 3. Note that 2 is not the same as 02, and the 2 digit codes are exceptions that YOU assign, not the custodian.Moving on to the “other” retirement funds, please advise exactly what the source of these funds are, and what account they are in now. Then we can determine if you will be penalized on these other withdrawals, but you should be able to escape any penalty on distributions you took directly from the 401k plan.Beyond that, you appear to be totally confused as to what the SEPP requirements are, but that does not mean that you may not luck out here. Let us know what these other retirement funds are, eg did you take a lump sum distribution from your defined benefit pension plan and roll it over to an IRA? or something else?2010-02-06 22:33, By: Alan S., IP: [24.116.165.60]

L3: Piecemeal 72TAlan… good catch. If seperation occurred at age 55 and the funds never left the 401(k) (no IRA involved)then there really was no SEPP to begin with.2010-02-06 22:46, By: Gfw, IP: [216.80.125.206]