L1: SEPPI am rolling over 25% of my 401k into an IRA. I am setting up a separate IRA for my 72t distributions. I plan on diversifying 25% a year my 401k. My question is can I contribute the rollovers to the separate SEPP IRA for three years to build up the balance and then start the 72t distributions. I am 56 this year. I plan on adding to my SEPP IRA in 2015,2016,2017 and start the 72t distributions in 2018.
2015 Rollover of $100,000 +2016 Rolloverof $100,000 + 2017 Rollover of $100,000
2018 – 72t distribution based on $300,000+/- balance of SEPP IRA
2015-12-02 22:26, By: MSUBraxton, IP: [184.108.40.206]
L2: SEPPYou cannot add to any SEPP 72-T plan/account after you start it. You must start distributions from SEPP 72-T plans in the year you set them up, and take the same annual distribution every year. You cannot defer taking distributions until 2018 as you said you plan to do. You obviously do not understand how SEPP 72-T plans work.
However, you can set up a NEW SEPP 72-T plan/account, even in the same year. Each SEPP 72-T plan/account will have its own balance, interest rate, and annual distribution, which must be started each year, and taken for 5 years.
Why do you want to proceed with adding or setting up additional SEPP funds 4 times ?
Why would you want to do this at ages 56, etc., and lock each of these amounts in for 5 years ?
If everything is now in your 401-K, have you separated from service with your company yet, or are you planning to ? Because, if so, then ask your company if they allow partial distributions. In, or after, the year you will become 55, this is permitted for 401-K plans if the company allows it, and provides better flexibility than SEPP 72-T plans.
Also, ask your company if your 401-K plan has company stock which had appreciated. If so, then you should discuss with your tax advisor the benefits of using the special NUA tax provisions. ( See this website, or J K Lasser Your Income Tax 2-page discussion).2015-12-03 14:16, By: dlzallestaxes, IP: [220.127.116.11]
L3: SEPPI plan on setting up an IRA. I am going to add to it for three years. Then I am going to set up a SEPP Is that permissible?2015-12-05 12:36, By: Msubraxton , IP: [18.104.22.168]
L4: SEPPThis response is completely different from your initial posting. Starting a SEPP at age 59 3 years from now makes absolutely no sense. At 59 1/2 you can withdraw any amounts at any time without locking the account for 5 years.
I suggest that you meet with a financial planner or tax accountant who can explain to you about “Retirement Planning”, and related tax aspects.
For example, you can only contribute $ 6,500 per year to an IRA, as long as you have that much in Wages or Self-Employed Earnings. You said you plan to “set up an IRA” and contribute to it for 3 years. That would be about $ 20,000 available in 3 years. That would not make sense to use for a SEPP.
Initially you mentioned rollovers of $ 100,000/year.
I suggest that you meet with a financial planner or tax accountant who can explain to you about “Retirement Planning”, and the related tax aspects.2015-12-05 15:20, By: dlzallestaxes, IP: [22.214.171.124]