Separate date

L1: Separate dateI recently was separated from my company after 30 years. I plan on rolling my retirement into an IRA. I also have a company sponsored 401k plan. My question is my 54th birthday was 12-21-03. My separation date was 12-31-03. Will I qualify for the separation at age 55 rule? Can I takedistributions from the 401k without setting up a SEPP and avoid the 10% penalty? Thanks2004-01-15 09:25, By: Red, IP: [67.34.168.30]
L2: Separate dateHello Red:
Based on the facts as presented, the answer is NO. Notice 87-13 governs in this case which basically says you must already be 55 or older in the year of seperation OR will attain the age of 55 before the end of the year.
My advice; if possible, find a way to change your date of termination from 12/31/03 to 1/1/04. Then you wiill qualify.
TheBadger
wjstecker@wispertel.net
2004-01-15 10:19, By: TheBadger, IP: [38.116.134.130]

L2: Separate dateGood morning Red:
This is an example of a really bad deal thrownat youby your company.If you can get to someone really high up in the company to plead your case and point out your 30 years of service and anything else you can come up with for your benefit, then you might have a chance to get your separation date moved from 2003 to 2004 as The Badger suggested. However, my guess is that”s not real likely to happen because I suspect the company has to get people off the rolls by the end of 2003 for their financial reporting. Lousey answer but that”s reality. So what do you do.
First of all, use this web site to run all of your calculations to project stuff. Second,find a financial advisor with experience with 72t work.It”s not easy and the answers seem to keep moving around.
You”ll probably have to set up at least two or more separate IRAs with different custodians for your SEPP and other IRA plans to work. There are some custodians who can keep things straight, but you have to look hard to find them.
Good luck
Jim2004-01-15 11:14, By: Jim, IP: [68.1.147.61]

L2: Separate dateThanks for the reply. I just thought I would confirm what I probably already knew. I just want to confirm this, my last day on the payroll was 12-31-03. Is that considered my separation date? I can”t get the company to change this date. It would bring in vacation and other variables. Thanks again. I am glad I found this site. It has given me a lot to think about.2004-01-15 11:26, By: Red, IP: [67.34.168.30]

L2: Separate dateJust a thought- In almost all cases the retirement commencement date is the day after the last day worked. In this case the last day worked was 12-31 -03 so the retirement date should be 1-1-04. It should be an easy question for yo-johnur comapany to answer for you; what is your retirement date.2004-01-15 22:15, By: jj, IP: [63.195.119.175]

L2: Separate dateIf he turned 55 in 03 and left in 04 what would that impact be on 72 T? Can you just take distrubutions? My husband has his cash balance pension coming and some exisiting IRAs.

thanks.

Linda2004-01-16 09:05, By: lrobey, IP: [171.75.230.201]

L2: Separate dateThe reply from jj brings up an interesting question.My last day on the payroll was 12-31-03. I was paid up until this date. Is my retirement date then, 01-01-04? That would mean I was separated in the year I turned 55 and thatcould make a huge difference. Thanks for the help.2004-01-16 09:27, By: Red, IP: [67.34.168.30]

L2: Separate dateThis one is getting interesting, presenting a string of points. One important point to remember is that retiring at age 55 or older and being able to get money without the 10% penalty ONLY applies to the money in the qualified plan, i.e., the 401(k) or pension plan. Once you transfer from the qualified plan to an IRA, you fall under the IRA rules which are age 59 1/2 for penalty-free withdrawals. I make this point because it sounds like some of the later posts are going in that direction of confusion.
Red, it sounds like you may be OK with your situation, but you do need to talk with your HR folks at your former employer to nail it down. And don”t move the money until you have it all cleared up.
Here is some terminology to watch for. It may or may not apply, but it is an interesting concept to be aware of. In some “legal speak” to indicate the date 01-01-04 and all dates after, they will phrase it as “after 12-31-03.” So, and others may be able to confirm or contradict this, I think your first date of retirement is “after 12-31-03″ which means you really retire at age 55 and get the benefit of being able to withdraw funds from your qualified plan without the penalty.
Other ideas are welcome.
Jim2004-01-16 13:21, By: Jim, IP: [68.1.147.61]

L2: Separate dateThanks for the advice Jim. I do have part in an employee 401k and the rest is my lump sum pension. I have not moved either one. I have a cousin who is a tax attorney and worked for the IRS while he got his law degree. I asked him this question this morning. I will let you know his answer.2004-01-16 15:32, By: Red, IP: [67.34.168.30]

L2: Separate dateBe sure to show your cousin this web site so he can figure out what to do (haha).
Have a great weekend and I”l be watching for your reply to your cousin”s thoughts.
Jim2004-01-16 15:52, By: Jim, IP: [68.1.147.61]

L2: Separate date
Make sure that you look at the wording carefully. It is something like…

Distributions made to you after you separated from service with your employer, if the separation occurred after you reached age 55
It doesn””t talk about retirement, only the date separation occurred. From your post, you were 54 on the date that you separated, terminated, employment. You won””t reach age 55 until 12/21/04.
As with most things, proper planning involves looking forward, not back. Just my thoughts.2004-01-16 16:01, By: Gfw, IP: [172.16.1.70]

L2: Separate dateThis situation is too important not to have an absolute answer with complete agreement from GFW & The Badger, the real experts here. It might be good for the two of you to get on the phone and discuss this, then post a concensus response. After reading all of Red”s inputs of information, I am of the opinion that his first date of “separation” is 01-01-04. And GFW is correct in that you need to distinguish between “Retirement” and “Separation.”
For example, in my case, when I retired from the USAF, my “Retirement Ceremony” was in September of 1992.Within a few days I moved from the area of my last duty assignment,but I was still “on the payroll” since I had a lot of leave time built up. My last day of “Active Duty” was November 30, 1992. I wasn”t physically “Present for Duty” but I continued on full pay and allowances through that date. (Don”t worry.The Air Force knew where to find me and could have put me back in a “Duty Status” real quick.) The next day, December 1, 1992, was my first day of retirement, and what I believe would also be my “Separation Date.”
For the last 10 years I have been a financial planner and have set up several 72(t) distributions for my clients. Believe me, I wish this site had been available to me in those early years. It is a great resource of information and useful tools.
Jim2004-01-17 08:29, By: Jim, IP: [68.1.147.61]

L2: Separate dateOften, date of termination, date of retirement, & date separation are used synonimously; however, this appears to be a case were those dates asre different and potentially very important.
Notice 87-13 says “A distribution to an employee from a qualified plan will be treated as within 72(t)(2)(A)(v) if (i) it is made after the employeehas separated from service for the employer maintaining the plan and (ii) such separation from service occurred during or after the calendar year in which the employee attained age 55.”
Now, this notice does not give us a definition of “date of separation” & we would need to research it elsewhere at some other time; however, I think it it pretty clear it means your last day on payroll, so to speak. Thus, in the example that started this discussion thread, I think the date of separation is 12/31/03; not 1/1/04; however inconvienent that may be.
TheBadger

2004-01-17 08:48, By: TheBadger, IP: [38.116.134.130]

L2: Separate dateFor what it”s worth, I agree 100% with TheBadger.
2004-01-17 09:18, By: Gfw, IP: [172.16.1.70]

L2: Separate dateI maybe beating a dead horse here but I really don”t have much to do these days but research on the net. I was reading my package information. I came across the form call Authorization of Payment by Company. I think this is the form that HR signs off on to release my serverance payment. It is interesting that there is a box that has the Final Separation Date (Last Day on the Active Payroll) and another box that has ALLIANCE Effective Date (First Day off the Active Payroll). I “assume” that will be filled in when I get my sererence payment. Just though I would throw this in to see if anyone has any more ideas.2004-01-17 10:43, By: Red, IP: [67.34.168.30]