Ready to pull the trigger!
L1: Ready to pull the trigger!I’m ready to begin my SEPP, looking for a sanity check on my annual distribution number:
First distribution: 1/15/2015
IRA Balance on 12/31/2014: $636,121.71
Interest rate (Nov 2014): 2.28%
Other inputs: 1)amortization method, 2)Single life expectancy, 3)full distribution each year
Annual distribution amount: $29,787.06
I verified this number manually using amortization formula with inputs of: 1 distribution per year, 2.28% rate, 29.6 year period (life expectancy for 55 year old), and above IRA balance. So I feel good about the distribution number but would like a sanity check.
Also, do the annual distributions have to be made between Jan 1 and Jan 15 in each of the subsequent years (2016-2019) or can they be taken anytime in the calender year?
And starting in 2020 I plan to take a different distribution (after 1/15/2020).
Thank you in advance for the help and the great website!
2015-01-06 17:35, By: Jib, IP: [22.214.171.124]
L2: Ready to pull the trigger!Good job – you are correct to the penny. Your annual distributions can be taken anytime during the year, and timing can vary from year to year. The only critical number is the 29,787.06, which must appear on your 1099R each year. After 1/15/2020 you can take out as little or as much as you wish. And you will likely have to file a 5329 each year to claim the SEPP exception because the custodian will probably issue you a Code 1 on the 1099R. Double check your 5498 or equivalent statement to be sure your 2014 year end IRA balance shows exactly what you are using for your calculation. The 5498 is usually issued in late May.2015-01-06 20:58, By: Alan S, IP: [126.96.36.199]
L3: Ready to pull the trigger!Thank you for the quick reply and confirmation of the numbers. This website has been really informative as I start my SEPP and early retirement!
I recall back in 1986 as I started my career (and family) – a couple of the old timers convinced me to max out the 401k, put it all in the SP500 fund and forget about it. That was the start of my life as an investor. Over the years I did what I could to maximize my salary and invested as much of it as possible in low cost funds and was content with getting the market average for a long time. Piece of cake right?
Let’s hear it for starting early and sticking to the plan in order to get to the goal of an early retirement!!2015-01-07 15:44, By: Jib, IP: [188.8.131.52]