SEPP Distribution Schedule
L1: SEPP Distribution ScheduleAs I mention in previous posts, I am kicking off a 72(t) this month. I will not be treating the first year as a stub year (will not pro-rate the first year). My plan is to take 6 equal monthly distributions this year (1/6 of the total amount each month from July -December). Beginning next year, I will continue monthly distributions equal to 1/12 of the full yearly amount. Do you see any concerns with this plan?2017-07-12 00:48, By: MRMCA, IP: [126.96.36.199]
L2: SEPP Distribution ScheduleYour plan is fine. You just have to manage the change in distribution amount in early January. When distributing monthly distributions, if they are automated do not set up the distribution date for either very early in the month or very late. I would use a date between the 7th and the 22nd of the month.2017-07-12 01:50, By: Alan S, IP: [188.8.131.52]
L3: SEPP Distribution ScheduleGreat, thanks Alan.
I will be sure to use a date as recommended when I set up the automatic distributions.2017-07-12 02:07, By: MRMCA, IP: [184.108.40.206]
L4: SEPP Distribution ScheduleHi, same subject matter, but I have a curious question too.
To use the prorated formula. I was going to do 5 months (first month being August to December), so is it a years worth (12 divided by 5)?
And I assume that to not use the pro rated version, then that is where it is 12 (months) divided by 5 (remaining months)?
And reference the prorated formula, we are responsible to readjust the withdrawal for the first full years monthly withdrawals? It is not done automatically? I assumed, when I eventually do the the paperwork, that it automatically takes either version into account.2017-07-12 13:32, By: Jedischultz, IP: [220.127.116.11]
L5: SEPP Distribution ScheduleJedis- When I did my second SEPP plan in 2007, it started in May, and I did not prorate. I simply instructed Vanguard to issue me an initial gross payment in May that was equal to 5 month’s worth (5/12th’s of annual payments), and also told them in June to start issuing the correct monthly payment going forward, while providing both of those two gross amounts, and once I got the correct June payment, and it stayed correct after that, I knew it was working correctly. I also used percentage values for Fed and State Tax withholdings and they worked correctly either way. This special instruction was added by me below section 3 of their IRA Distribution Request Form, where I checked Fixed Payment, and noted 72T plan. That plan ended in 2012 with no problems.2017-07-12 14:13, By: Ken, IP: [18.104.22.168]
L2: SEPP Distribution ScheduleMRMCA — I am not sure what you are saying that you plan to do.
“I will not be treating the first year as a stub year (will not pro-rate the first year). I plan to take 6 monthly payments ( 1/6 of the annual amount in July-December).”
I think that you are saying that you will be taking the full annual amount over the remaining 6 months of the year by taking the equivalent of 2 months’ amounts each month. That is fine, if that is what you meant.
And then in January 2018 you will cut those payments in half, and take 12 monthly payments.
Someone else made a suggestion that I think that you should consider because it removes any chance of forgetting to make the change in January — take a lump sum as your first distribution now equal to the first 6 months (for Jan -June) of the annual distribution, and then start taking your monthly distributions in July. Then you will not have to remember to make any change in January. This way you should have no concern if you become incapacitated, and someone else does not know to make a change. I would never trust that any financial institution will have the capability to provide for this type of change that you might include in your written instructions to them.2017-07-12 14:54, By: dlzallestaxes, IP: [22.214.171.124]
L3: SEPP Distribution ScheduleCorrect, I’m taking the full amount this year by taking the equivalent of 2 months’ amount each month over the next 6 months.
I will wait until next year to set up the automatic monthly distributions. For this year, I will process manually each month.2017-07-12 16:04, By: MRMCA, IP: [126.96.36.199]