L1: Premature distributionI have a client who started taking SEPPs in January “09. He now wants to take a one-time premature distribution of a greater amount. What will be the ramifications to him? 2009-08-03 12:26, By: Paul, IP: [184.108.40.206]
L2: Premature distributionHe busts the SEPP, pays penalties for distributions received in 2009 and the one-time distribution and then starts over.2009-08-03 13:27, By: Gfw, IP: [220.127.116.11]
L3: Premature distributionGFW is correct, obviously. Unless his supplemental distribution qualifies for one of the other exceptions. Or, if he took only the prorata distribution, and the additional one brings him up to, or less than, the annual limit.2009-08-03 18:32, By: dlzallestaxes, IP: [18.104.22.168]
L4: Premature distributionHe could not have taken a pro rated distribution because his first one was in January.
However, if some one needs a “one time” distribution only 6 months into the first year, I think some serious analysis is in order before starting another SEPP to make sure the plan is set up to allow for some contingencies to occur that require extra dollars. That’s half the battle, the other half is applying discipline to expenditures once the plan begins to help reduce the chance for a busted plan.2009-08-03 20:04, By: Alan S., IP: [22.214.171.124]
L5: Premature distributionHe could have taken a pro-rated 1/12 in January, and monthly since, or 1/4 in Januaryand another 1/4 in April, and another 1/4 in July.2009-08-03 23:47, By: dlzallestaxes, IP: [126.96.36.199]
L6: Premature distributionWhy is everyone guessing at what he took… maybe he should merely tell us.2009-08-03 23:52, By: Gfw, IP: [188.8.131.52]
L7: Premature distributionThat would be too easy.
Why don’t we reject all postings that don’t include the basic information needed to give an informed response ?2009-08-03 23:55, By: dlzallestaxes, IP: [184.108.40.206]
L8: Premature distributionI think we intrepreted the initial post that a greater distribution was taken than was allowed under the rules.
However, in the event that the post meant that only the distribution patternwas interrupted but the annual amount not breached, then the plan is intact. For example, 1/12 taken out each month through June, then taxpayer needs a larger lump sum and takes out 50% of the annual in July. In that case, the plan is still intact, but no more can be distributed until 2010. If the annual total is breached, then the plan can still be salvaged if a 60 day rollover of the large distribution is completed.
We do not know for sure what the circumstances are.2009-08-04 00:42, By: Alan S., IP: [220.127.116.11]
L9: Premature distributionSorry Alan, but it is just anotherguess.2009-08-04 00:45, By: Gfw, IP: [18.104.22.168]
L10: Premature distributionPaul:
Please fill in the missing details so we can quit guessing and get the correct picture of what’s going on here.
Jim2009-08-04 03:05, By: Jim, IP: [22.214.171.124]