Preferrable Distribution Frequency

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L1: Preferrable Distribution FrequencyI’m now 56-1/2 and plan to start SEPP before this month ends. I’ve calculated an annual distribution of $32400 (rounding of actualcalculation for this discussion) or $2700/month. I was planning to take monthly distributions, but nowI’m concerned that 2009 1099R will show 11/12 of annual amount and 1/12 in 2014, where other years are the full $32400 amount, which might raise flag for IRS. Rather than taking monthly distributions, would it be advisable to take 4 equal quarterly distributions (Feb, May, Aug, Nov) each year (starting this month) over next 5 years, so that each 1099R for 5 years 2009-2013 is identical? Or take extra monthly distribution this year and none in 2014? Of course, would wait until the 60 months expires (March 2014) before taking any additional distributions.Thanks – this web site has been a real blessing!2009-02-11 01:02, By: EDH2007, IP: []
L2: Preferrable Distribution FrequencyFor the purposes you mention, it makes no difference whether the distributions are annual, monthly, quarterly, etc. In the first year you really have the option of 11/12s or 12/12s.Just make sure that you check out the last payment date calculator and take 5 full annual distributions (you will be under the 5 year rule)between the beginning and end of the plan. Keep good documentation!Hope this helps.2009-02-11 01:10, By: Gfw, IP: []

L3: Preferrable Distribution FrequencyOK, thanks! Guess I was trying to make it more complicated than it already is. Yes, did run last payment date calculator, and have documented my plan in detail.2009-02-11 02:43, By: EDH2007, IP: []

L4: Preferrable Distribution FrequencyEDH2007:Yes, you can select any distribution frequency you want as long as it is at least annually. The IRS does not know or care how often we receive distributions; only the total amount distributed per year matters.I use the quarterly payment schedule for my SEPP plan and that works well for me. I am good at budgeting and have no trouble making the money last from one quarter to the next. Others prefer to receive checks more often if it is easier for them to keep track of the amount they are spending and receiving. The monthly payment is most like receiving a salary, so is familiar and perhaps more comfortable.Another option, rather than do the 11/12ths thing, would be to request an initialdistribution that includes an extra month’s paymentin it so that your total distribution for 2009 isthe full year’s amount.You could also start 2009 with quarterly payments and then switch to monthly payments in 2010. That too would result in getting a full year’s distribution amount in 2009.As you can see, there are a number of options here and it is up to each SEPP plan owner to select those which suit them best.2009-02-11 19:27, By: Ed_B, IP: []

L5: Preferrable Distribution FrequencyEd_B,Thanks for taking the time to spell out the various options that I have. Very helpful!2009-02-12 14:55, By: EDH2007, IP: []

L6: Preferrable Distribution FrequencyHello, EDH2007:You’re most welcome to my comments. I’ve gotten TONS of help from the great folks on this web site, so always like to share what I can with others. Good luck with your SEPP. :-)Ed2009-02-12 17:27, By: Ed_B, IP: []