recalculate

L1: recalculateHi, I have be in my plan since December 2003. My plan has grown a great deal. So has the cost of living. I am in need of a raise in my distribution. Although I have medical problems, and they make my life difficult, they would not necessarily keep me from working. I would like to calculate how much it would cost me to pay the penalty and start my plan over so that the distribution can be recalculated. As of December I will have taken out $80,000 since December 2003. I just want to take out the penalties and recalculate my distribution which would give me approximately $7,000 more each year. How do I figure out how much to have them take out for taxes. I am 53this year.thank you2007-10-05 20:53, By: Trisha, IP: [74.162.53.147]
L2: recalculateThe calculations of interest and penalties on the 10% early withdrawal penalty are complex. But if you have an $8,000 penalty ( $ 80,000 x 10%),let”s assume the interest and related penaties could be another $ 4,000. So that”s $ 12,000 you”ll owe. If you are in the 25% tax bracket, then you have togross this figure up by 33 1/3% ($4,000) to a total of $ 16,000. ( Then the taxes will be $ 4,000 at 25% of $ 16,000.) If you are in the 35% tax bracket, then you gross it up by about 50% ( $ 6,000) to a total of $ 18,000. ( Then the taxes are about $ 6,000 at 35% of $ 18,000.)
As in other postings, we usually suggest that you pay the taxes with your own check as “estimated taxes”, rather than having them withheld and remitted by the custodian of your SEPP 72-T account.This way you always have your own cancelled check of proof of payment. And I always suggest filing tax returns and making significant payments by using “certified mail” and “return receipts”.2007-10-05 22:46, By: dlzallestaxes, IP: [141.151.70.9]

L2: recalculateCan you elect to take the one time change allowed under Rev. Ruling 2002-62, 2.03(b) whichallows a one time change to the Minimum Distribution method if the current plan was based on either the Amortization or Annuitization methods?2007-10-06 06:16, By: flyitnow, IP: [75.83.76.162]

L2: recalculateThe one time switch is available, but it is typically used to reduce the payment because it yields considerably less than the other methods. Her account has grown, but it would have had to more than double for her to get the desired increase using the RMD method. Still, it is definitely worth checking out to see if it presents a possibility of avoiding a busted plan.2007-10-06 16:11, By: Alan S., IP: [24.116.165.60]