L1: SEPP QuestionHi,
I read through the FAQ and several of the posts. However, did not find the answer to a question I have regarding a SEPP. Here is the scenario. Say a person starts a SEPP and during the five year period the individual turns 59.5. At that time, in addition to the SEPP payments, can he/she also take out additional funds that would be free of the 10% penality, since the individual is now 59.5.
Doug2009-05-12 16:53, By: DougO, IP: [22.214.171.124]
L2: SEPP QuestionNO. That would be a modification. That is why we recommend funding a SEPP with the minimum amount needed for distributions. Then keep the balance of your IRA account(s) in a separate account to start another SEPP or take withdrawals subject to the 10% penalty only on those additional withdrawals from a different account. This way you would notg “bust” the initial plan RETROACTIVELY from its beginning.2009-05-12 17:21, By: dlzallestaxes, IP: [126.96.36.199]
L3: SEPP QuestionTo put it another way, if you had another IRA that was not part of the SEPP plan (it’s balance was not used at the outset to compute your SEPP payments, etc.) then you could take money from that (Non-SEPP) IRA after reaching 59 1/2 without it causing a problem with your SEPP that would continue until you reached the required deadline. It is recommended to make that IRA split before starting at SEPP plan, so you have that flexbility, along with the flexibility that DLZ references where you can taken moeny from it before 59 1/2 and only incur the 10% penalty on that withdrawal and not your entire SEPP to date.Once all of your IRA money is included in the SEPP plan, you cannot access it for anything more than your correct payments for the entire period of years you have to keep the Sepp plan running. Ken2009-05-12 17:34, By: Ken, IP: [188.8.131.52]