Required Minimum versus Amortized and Annuitized

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L1: Required Minimum versus Amortized and Annuitized
I am considering early retirement. Age 58 this year. Beneficiary age 53 this year.
Amount in 403b $362,200. Would roll over to IRA.
I am confused as to the Distribution Requirement. If I run this site’s calculator, I get
$13.4k Minimum Required
$17.5k Amortization and $17.4k Annuitization.

Are the Amortization and Annuitization amounts MINIMUM REQUIRED, or are they MAXIMUM permitted per “year.”
And what is the definition of “year”. Is it twelve calendar months from first withdrawal or is it the standard calendar year – meaning if I were start a 72t withdrawal in November, am I obligated to wait for the withdrawal occuring in 2012 to be November
2012 or can it be, say, January 2012 or as late as December 2012?
2011-08-29 20:45, By: MackeyBloom, IP: []

L2: Required Minimum versus Amortized and Annuitized
Each method is calculated using a formula provided by the IRS. Each result is both a minimum and maximum. You select one of the methods and then you stick to it – in your case – for 5 years.
At age 58, I would suggest that you look for other alternatives – talk to your TSA Plan Administrator, they may have other options available to you.
SEPP years are calendar years. But if you adopt a SEPP, check out our FAQ for
Arnold v. Comm., 111 TC No. 12 (1998).
2011-08-29 20:56, By: Gfw, IP: []

L3: Required Minimum versus Amortized and Annuitized
Check with your plan administrator. 403-B is the non-profit organization equivalent of 401–K. Therefore, most, if not all, of the discussions on this site about 401-K plans apply to most 403-B plans. Your plan may allow “partial withdrawals”, which means
that if you “separate from service” (i.e. retire or are terminated) after 55, you are not subject to the 10% early retirement penalty, even if you take payments before 59 1/2.
At age 58+, I would look to any other way to get to 59 1/2 without a SEPP 72-T, in order to avoid locking yourself into a plan for the next 5 years ( 60 months) which might result in significant penalties if you deviate at all during the next 60 months.
To answer your logistics question:
1. Have you read the FAQ, etc. on this site ?
2. The “plan year” is calendar year.
3. In the first calendar year, you can withdraw EITHER a full annual distribution, OR a PRO-RATED amount based upon the number of months left in the calendar year.
4. You must continue taking distributions until the later of 5 years ( 60 months) or age 59 1/2. In your case, if you are now 58 1/2, you would have to continue until you were 63 1/2.
From your questions, it appears that you do not even understand the basics of SEPP 72-T plans ( which you might not even need). Read this website, and get the book, if your 403-B does not allow partial withdrawals. If it does allow them, then that is probably
your best solution.
If you still do not understand, then find a tax or financial professional who does.

2011-08-29 22:11, By: dlzallestaxes, IP: []

L4: Required Minimum versus Amortized and Annuitized
While it is true that a 72t plan should be avoided if there are other options available to secure funds without paying a penalty, it is also true that if you start a plan fairly close to age 59.5, there is a lower cost if you
have to bust the plan.
This is true because the recaptured penalty for a busted plan only applies to distributions taken prior to reaching 59.5. If you opt to start such a 5 year plan while closing in on 59.5, you should try to take your 72t distributions
for the calendar year you reach 59.5 after reaching that date rather than before. That would result in distributions taken in that year not being subject to the penalty even if the plan is busted before the 5 years has been completed.
2011-08-30 00:27, By: Alan S., IP: []

L5: Required Minimum versus Amortized and Annuitized
Alan — Great planning point !!!!
Also, what you are saying is that if you think that you can make it to 59 1/2, then it’s almost a no lose situation, and the 5-year provision is basically meaningless once you reach 54 1/2 to start a SEPP 72-T plan.
2011-08-30 00:43, By: dlzallestaxes, IP: []

L6: Required Minimum versus Amortized and Annuitized
Dlz… not exactly
Break after 59.5, he would still owe retro active penalties and interest on the pre-59.5 distributions — might just as well take what is needed and pay the penalty now.
2011-08-30 00:55, By: Gfw, IP: []

L4: Required Minimum versus Amortized and Annuitized
Thanks everyone.
This whole SEPP/72t thing is confusing. And yes I did get the book. Finally reached a counselor at the organization where my 403b is parked who understood what I am contemplating who also mentioned the Age 55 and no withdrawal penalties.
This points to that I will not need the 72t withdrawal after all, Anyone want to buy a book?
2011-08-31 02:32, By: MackeyBloom, IP: []