SEPP distribution and age 59.5 distribution
L1: SEPP distribution and age 59.5 distributionIf you have an SEPP distibution and will be turing 59.5 during the time frame of the SEPP, can you still take the early 59.5 distribution? (in other words can you have two distributions).2008-06-03 10:37, By: liz, IP: [22.214.171.124]
L2: SEPP distribution and age 59.5 distributionYou can always take two distributions, but the real question is whether the 2nd distribution will bust the plan. You need to provide more information like are you working under the 5-Year rule or the age 59.5 rule.2008-06-03 10:57, By: Gfw, IP: [126.96.36.199]
L2: SEPP distribution and age 59.5 distributionMy SEPP is under a 5yr plan, I am in the 2nd yr; I will be turning 59.5 in August this year.2008-06-03 15:24, By: liz, IP: [188.8.131.52]
L2: SEPP distribution and age 59.5 distributionThen you have to live with the plan for 5-years (365 daystimes 5 years 2 daysto be sure) from the date of the first distribution. If you take any additional amount out of the IRA used to fund tetheEPP, you will bust the plan and owe 10%pepenaltyplus interest on the penalty)on any distributions that occurred before age 59.5.2008-06-03 15:35, By: Gfw, IP: [184.108.40.206]
L2: SEPP distribution and age 59.5 distributionWhile you must complete the 5 year plan to avoid all penalties, it may be wise to defer distributions for a couple months now to after you turn 59.5. That way, should you have to bust the plan for some reason a couple years from now, you will not owe penalties and interest on distributions you take post 59.5, just those you took under the plan prior to 59.5. Look at it as a modest form of insurance. In other words, you must take out the correct total only in 2008 and forward, but you are free to space your distributions this year to concentrate more of them after 59.5 than before.
You may get two 1099R forms this year if your IRA custodian does not recognize your plan, one coded early (1) and the other normal (7). In that case, you should attach Form 5329 and change both of them to reflect the exception (code 02).
, 2008-06-03 15:55, By: Alan S., IP: [220.127.116.11]
L2: SEPP distribution and age 59.5 distributionThis brings up a related question for me and the poster didn”t go into full details of their plan. I”m in the same process, I”m 58,and my SEPP will run until I”m 60.5 due to the starting time. The SEPP and its” universe is from one IRA and I also have a second significant IRA. My question is, after age 59.5, can I utilized the second IRA funds if needed and result in ordinary taxation w/o any penalties, and w/o any impact on the SEPP? I think the answer is yes, but I want to make sure what my options may be.2008-06-04 11:49, By: Larry, IP: [18.104.22.168]
L2: SEPP distribution and age 59.5 distributionLarry,The answer is indeed Yes. Any IRA account you have maintained outside your SEPP universe is totally unaffected by your SEPP and vice versa.
Any distribution you take from the non SEPP account after 59.5 is just a normal distribution, subject to tax but no penalty.
Any basis you may have in your IRAs (Form 8606) applies to distributions from either your SEPP universe IRAs or other IRAs. That would mean that distributions taken from any IRA at all during a given calendar year would have the same proportion of tax free vrs taxable dollars.2008-06-04 13:56, By: Alan S., IP: [22.214.171.124]