Sepp distribution timing

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L1: Sepp distribution timingI have an existing SEPP that started on Novmber 15th 2008 as a lump sum.Then I began monthly payments in Jan 2009 equal to the annual 22,321 I began with in 2008.I will be 59 1/2 on Jan 8 2013.Does my SEPP end on 11-16-2013 as the calculator states,or since the first payment was a lump sum,does it end on Jan 9 2013?It seems that will be 5 years of equal payments to me.2012-09-18 15:47, By: GamecockFan, IP: []
L2: Sepp distribution timingIf you got the 11-16-2013 date from our calculator, then the plan will end on 11-16-2013.
As a 5 year plan, it will end 365 days time 5 years plus 2 days (for leap year,etc) from the date of the 1st distribution.2012-09-18 16:12, By: Gfw, IP: []

L3: Sepp distribution timingThanks,i’ve seen conflicting information on this,but I guess the start date is the start date,no matter how you take it,right?But it’s counted as an”annual” distribution.Still a little vague.2012-09-18 16:46, By: GamecockFan, IP: []

L4: Sepp distribution timingIt is not vague at all. You, and others, confuse the fact that the regulations do not say 5 annual payments, or the equivalent if paid more frequently. They say 5 years !!!
After the 60 months, or age 59 1/2 if later, the plan terminates, and you are free to proceed accordingly based upon your needs and tax situation. The distributions are always taxable, the difference being if they are subject to the 10% penalty, and if deviation subjects you to the 10% poenalty retroactively on the cumative distributions since the first one.2012-09-18 18:06, By: dlzallestaxes, IP: []

L5: Sepp distribution timingThanks,I’ll stick to what the calculator says!After I take my distributions in 2013,should I just show Jan-Nov as 72t on my 2013 taxes,and show my Dec distribution as ordinary income?
I just don’t want to screw up by not showing the same amount for each year.I thought you had to withdraw the same amount each calender year.2012-09-18 20:07, By: GamecockFan, IP: []

L6: Sepp distribution timingDear GamecockFan:
First let’s get this out of the way …
Now, to your situation. You should have been getting either Code 1 or Code 2 on your Form 1099-R each year. If Code 1 then you should have filed Form 5329 to claim the exception to the 10% penalty due to 72(t). If Code 2 then this indicates an exception and you don’t need Form 5329.
Since your plan runs beyond your age 59 1/2, any distributions in 2013 BEFORE your turn age 59 1/2 will be coded either Code 1 or 2. ALL distributions after you turn age 59 1/2 should have Code 7 for “Normal Distribution.” Check with your custodian to be sure they automatically make this change as some don’t until you ask them to change codes.
So if you have distributions before and after age 59 1/2 you will receive two separate Form 1099-R’s to report the two different codes. If you use a tax program simply input the data from each form and the program will put it where it goes. If you use a tax preparer, ask them how they handle this and you should get the same answer I just described, otherwise you need to seek a new tax preparer.
Finally, you DON’T annotate “72(t)” anywhere on your tax return. Form 5329 takes care of explaining this situation for Code 1 on Form 1099-R.
Jim F2012-09-18 20:25, By: Jim F, IP: []

L7: Sepp distribution timingIf you prepare your own tax returns, I suggest that you hire a tax professional.2012-09-18 20:47, By: dlzallestaxes, IP: []