# Rounding Down allowed?

L1: Rounding Down allowed?

I know this is kind of a silly question but, if I calculate an SEPP distribution of $11,135.17, but decide to “round down” to $11,000.00 and NEVER change that as an annual distribution, I assume that’s acceptable – Correct? Meaning, you’re not required to take the maximum amount to the penny – So long as you take the exact same amount each year thatis nomore than the maximum.

2018-06-06 22:26, By: CraigK, IP: [173.69.144.154]

L2: Rounding Down allowed?

When did you start, or haven’t you yet ?

Give us your figures, so we can check your calculation.

You can probably adjust the interest rate you are using in your calculation, and get the result you want.

2018-06-06 22:30, By: dlzallestaxes, IP: [173.59.49.132]

L3: Rounding Down allowed?

Yes, just in the interest rate down should give you the results you want. You can take any amount less than 120% of the midterm rate.

2018-06-06 22:33, By: Sm69, IP: [2600:6c52:6200:832:8181:f8f1:5a40:6b71]

L2: Rounding Down allowed?

Rounding is allowed.. you can round down to 11,135, but that is about it. Picking an arbitrary number like $11,000 is not acceptable. Rounding is OK, as long as it is rounding less than $1.00

If you want $11,000 then you need to do the calculations to find the interest rate that would generate the $11,000 figure.

2018-06-06 22:45, By: Gfw, IP: [73.217.141.7]

L2: Rounding Down allowed?

[Responses to questions]

I haven’t started the plan yet – I was just trying to see if it was possible to just “overfund” the plan. It sounds like the answer is “yes, but” – You have to use precise numbers, and round by no more than a dollar.

Stats:

November 1972

Starting 7/10/18

3.44%

$233,862.21

Rather than messing too much with it, it sounds like $11,135.00 would be acceptable. Otherwise, I’d have a strange IRA off to the side with around $2k sitting in it.

I was just trying to simplify things but, apparently, the calculation is rather inflexible.

2018-06-06 23:05, By: CraigK, IP: [173.69.144.154]

L3: Rounding Down allowed?

Since you are 46, I think that 13+ years is a long time to have to make sure that you will not have any emergency that you might need some more money. And that would bust your plan, and cost you a 10% penalty retroactively on all of the cumulative distributions.

I suggest starting with putting $ 200,000 into the SEPP, and keeping $33K in a separate IRA until you are 54 1/2. Then you could set up a 2nd SEPP to carry you until age 59 1/2. That way, if you need a few thousand in any year before 54 1/2, you could just take what you need from the emergency SEPP, and pay the 10% penalty only on the money you need then.

2018-06-07 00:48, By: dlzallestaxes, IP: [173.59.49.132]

L4: Rounding Down allowed?

dlzallestaxes,

Yes – That’s an excellent suggestion. In those years when the market drops (it happens, no really, it DOES) – It’s probably a good idea to have some nontaxed funds to either withdraw or convert (assuming the 5-year conversion “loophole” still exists).

I probably won’t start the distributions in 2018, as I have five months of employment that will be taxed. Also, it’s quite possible that rates will be a full percentage point higher next year. If I do an annual distribution, I basically have until 12/2019 to pull the trigger on this. In the meantime, I’m looking at some “gig economy” options. It’s possible that I might even return to full-time after a little sabbatical. I was just trying to better understand the 72t. Thanks!

2018-06-07 16:08, By: CraigK, IP: [96.244.61.200]