Self-administered vs. custodian-administered SEPP

L1: Self-administered vs. custodian-administered SEPPCan anyone give a typical figure for SEPP administration from a brokerage firm? Is it at all worthwhile to have someone else administer my SEPP, since the calculations are pretty straightforward and ultimately it”s me that”s dealing with the IRS?If self-administering a SEPP, can one simply request annual withdrawals from the IRA funding the SEPP (assuming the amount is =< than the correctly calculated distribution, of course) and file the 5329 annually? Would the IRA custodian do any withholding of taxes, as they may assume it''s not a qualified distribution? Any other pitfalls? Thanks!- Casey2007-10-03 14:37, By: Casey, IP: [71.111.153.21] L2: Self-administered vs. custodian-administered SEPPCasey, I have two separate SEPP''s that I started in the past two years,one for an IRA with Schwab since early 2006, and another with an IRA at Vanguard that I started in May 2007 which was to fund a second home purchase. In both cases, I calculated the details of the SEPP plan, including payment amount per year and payment frequency and date within the month to bepaid, and submitted it to them (using the calculator and the SEPP documentation form that you can find on this web site) and they both agreed to make the payments as I outlined. I told them how much to take out in FED and STATE taxes, and Ieven changed the FED PCT withholding on the older one this year. The Schwab one is paid 2 x per year, and the new Vanguard one is paid monthly. Both transfer the funds into my checking account and I am not charged anything for this that I have ever seen. TheSchwab IRA account is managed by an investment firm who uses Schwab as the custodian, so I do pay them a % fee based onhow much money they are managing each quarter, but no specific charges related to the SEPP or the payments thatthey make to me. Schwab codes my 1099-R as code 2 "early no penalty withdrawal". I will need to file a 5329 for the Vanguard as there is awarning on their website that they will code all early distributions with code 1, so it is up to me to file the 5329 to document that no penalty applies. I don''t know if you would call my plans self administered or not, but since I am the one that is responsible to the IRS for having the proper amounts paid out on these plans, I did not want to just ask them to compute it for me. The Vanguard site did offer the calculation sheet to do for my SEPP, and it matched my figures from this website calculator, so that was a good feeling. I hope this info helps. KEN2007-10-03 15:19, By: Ken, IP: [151.199.61.30] L2: Self-administered vs. custodian-administered SEPPThanks Ken, that does help a lot. The Vanguard SEPP you have sounds closest to what I have in mind. Do you know if the tax withholding that you specified to Vanguard is necessary? In other words, could I not take the full amount and be responsible for quarterly reporting/payment of any taxes due? Is the 1099R only given out in the first quarter of each calendar year? Thanks again, Casey2007-10-03 15:58, By: Casey, IP: [71.111.153.21] L2: Self-administered vs. custodian-administered SEPPWithholding on IRA distributions is optional, and you can decline it. In fact, for a SEPP plan, it is somewhat safer to pay using quarterly estimates and have the full gross SEPP annual distribution paid to you. There have been a few cases where a mixup in communication occurred with the IRA custodian over amounts being gross or net of tax withholding. However, as Ken indicated, you can use withholding if you wish as long as you stay on top of the distributions and are aware of this potential pitfall. The 1099R is issued at the end of January for the prior year. The recent trend of IRA custodians (Schwab is so far an exception) toward coding all distributions as early will naturally lead to many plans being totally self administered, since even if the custodian reviews the calculations, most will still not provide the exception coding. Still,if they will review your calcs at no cost, there is no downside even if they will not provide the excpetion coding. It represents an additional independentcheck on whether you did everything right. Anydifferences can then be resolved. 2007-10-03 17:02, By: Alan S., IP: [24.116.165.60]