Recalculation to RMD
L1: Recalculation to RMDwould like to recalculate my SEPP from the Amortization Method to the RMD.I was born 6/19/1959. Started SEPP in 3/19/2012 using Amortization5 Year date: 3/19/20171st Modification Date: 12/20/2017Rev Rule 2002-62 .3(b) says I may change once from Amortization to RMD and it is not treated as a modification. I took my regular Fixed Amortization payment earlier in the year. My account is now significantly more. May I recalculate now using 12/31/2015 and take out the additional funds? The two payments would add up to the new RMD calculation. Or would it be safer to recalculate in January?2016-12-03 18:19, By: Scott_D, IP: [188.8.131.52]
L2: Recalculation to RMDIf you were born 6/19/1959, you will be 59 1/2 on 12/19/2018, not 2017. One of your dates appears to be wrong. Since I think that you know when you were born, I think you might have miscalculated the 1st modification date.2016-12-03 22:03, By: dlzallestaxes, IP: [184.108.40.206]
L3: Recalculation to RMDSorry that’s a typo. I do have that correct in my paperwork.2016-12-04 00:48, By: Scott_D, IP: [220.127.116.11]
L4: Recalculation to RMDIt is recommended that you do the one time RMD method change in a SEPP at the beginning of a new calendar year. Since it sounds like you already took out the full amount for the year 2016, you cannot recompute and take another distribution in 2016. Most often, changing to RMD generates a lower payment. I did the change in the 4th year of my 5 year SEPP, and it reduced my payout by 1/2, because I had a rate over 5% in my original AMORT calc from 2007. Don’t forget you have to do it (new RMD calc) at the beginning of each year until the SEPP ends once you make that change, using the newest year end balance for your IRA, and your new age in the new year. I had my custodian stop my auto monthly payments after December, and had them resume after I gave them a new monthly amount (1/12th of the new yearly total for RMD in each year I did the RMD method. Don’t forget to check the tax withholdings as well, in case you had the custodian taking out a fixed amount, as that may need changing as well.
2016-12-05 04:56, By: Ken, IP: [18.104.22.168]
L5: Recalculation to RMDThank you for your reply!Changing to RMD will actually increase my payment as my account has almost doubled in value since I started my SEPP. And the Amortization rate was only 1.40%.Thanks for the other tips they were already on my radar.One thing though I’m not getting. From the rules I’ve read the thing that happens when you re-calculate is that you change the distribution amount. Distributions are not required to be single payments. So, what’s wrong with recalculating now and take the additional for 2016? And so far the IRS doesn’t ask for any proof of calculation or method. I know under and audit they would. I understand that it’s a lot safer to calculate and take a single distribution as mistakes are easier to avoid. I will probably wait until January to re-calculate, but it would be great to get the additional for 2016 if I could do it without much hassle.2016-12-05 17:07, By: Scott_D, IP: [22.214.171.124]