Should I move my IRA from a trusted brokerage just to get 72t verification?

L1: Should I move my IRA from a trusted brokerage just to get 72t verification?First, many thanks to dlzallestaxes & Alan S for you detailed and timelyanswers. Wanting to create a New SEPP IRA, 8-16-63 and looking for a 11-15-16 for a first date of distribution. I’ve found 2 small companies that will insure my 72t is correct and designate so with the IRS, but they both ask me to move from IRA from Vanguard to them, One uses Schwab plus a management fee, the other is similar.
That seems a high price just to get a confirmation that what is a fairly simply calculation. Is this what I should expect, or are there alternatives that let me keep my IRA with a low load offered by Vanguard?
Thank you2016-10-13 14:32, By: Bpower, IP: [67.177.186.52]

L2: Should I move my IRA from a trusted brokerage just to get 72t verification?I do not know of any procedure that will “insure” (or “ensure”) that the IRS will definitely specify and not challenge a 72t designation. The documentation is not required to be submitted with the tax return, and even if you attached it, or submitted it separately, I doubt if the IRS would even look at it, or acknowledge it.
My clients sleep well keeping their SEPP 72t plans with Vanguard, and benefitting from their low fees, and no management fee.2016-10-13 15:06, By: dlzallestaxes, IP: [108.36.116.44]

L3: Should I move my IRA from a trusted brokerage just to get 72t verification?So, I set up the IRA in Vanguard, make the calculation, take the disbursement, submit the 1099R and the 5329 with my taxes and hope I didn’t make an error. I’ve seen too many people on this site talk about getting bit by the IRS when they made a mistake.
I hear what you’re saying, there’s not way to guarantee a mistake won’t be made, but it would seem there would be benefit of getting someone with experience to check my work, and no one at Vanguard or Fidelity will help.2016-10-13 15:31, By: Bpower, IP: [67.177.186.52]

L4: Should I move my IRA from a trusted brokerage just to get 72t verification?Many tax accountants have the ability to check your work. Many people on this website have posted that they have had a good experience working with the people at Vanguard. You just have to get to the right department.2016-10-13 15:34, By: dlzallestaxes, IP: [108.36.116.44]

L5: Should I move my IRA from a trusted brokerage just to get 72t verification?That’s really great. Thank you. In all my research, no where does it address this issue of making the calculation. There is no governing body or magic formula, one simply makes the calculation, get an experienced confirmation and move forward.
It is interesting to note that I’m not the only one who feels this way. There are companies that increase assets under management simply by offering their experience in making the calculation and handling the tax paperwork annually. Much cheaper to find an experienced accountant and do it yourself.
Thanks again.2016-10-13 15:43, By: Bpower, IP: [67.177.186.52]

L6: Should I move my IRA from a trusted brokerage just to get 72t verification?Which method are you using (RMD, amortization, annuitization)? The calculation is pretty simple.
Also, I built a spreadsheet tracking my monthly withdrawals for the year to make sure I take out enough for the year.2016-10-13 23:18, By: brkr12002, IP: [68.98.39.252]

L7: Should I move my IRA from a trusted brokerage just to get 72t verification?I would not transfer an IRA account just to avoid having to file a 5329, but it should be noted that Schwab ETFs trade commission free and now have ERs that equal Vanguard and in some cases are even lower. Last week Schwab lowered the ERs again to match Blackrock. Schwab has been one of the very few custodians who will provide exception code 2 on the 1099R in the past, and probably continue to do so. They may or may not verify your calculation and provide support for your SEPP helping you avoid an error. But I would still not move my IRA there if you are otherwise happy where you are.2016-10-14 18:15, By: Alan S, IP: [160.3.87.235]

L8: Should I move my IRA from a trusted brokerage just to get 72t verification?That’s interesting about Schwab. Looks like they are seeing more 72t’s. Neither Vanguard or Fidelity provide the exception code to the IRS. I am indeed reluctant to move my account, but the idea that they will provide the exception code is attractive. It seems one would be less likely to be questioned by the IRS.2016-10-17 15:30, By: Bpower, IP: [67.177.186.52]

L9: Should I move my IRA from a trusted brokerage just to get 72t verification?Why would there even be a problem if you include form 5329 with your taxes? Wells Fargo codes mine as 2 but I’m in the process of moving my IRA with a 72t, to Fidelity. I know they will only use code 1, but I’m just planning to be sure to include form 5329. Wells Fargo now charges hefty fees and will not allow you to hold your IRA without management fees, which are around 1.5% of the total. That’s why I’m moving.2016-12-15 23:12, By: Dee, IP: [173.216.239.224]

L7: Should I move my IRA from a trusted brokerage just to get 72t verification?Utilizing the calculator on this site with $600k, birthday of 8/16/63, beginning 11-15-16, I show an SEPP of approximately $24k under both the amortization and annuity methods. I read somewhere that one of these has more flexibility, but I don’t recall which or why.
What is RMD? Also, the calculator showed the following:
10/01/2016 – 10/31/2016: 1.47% | 11/01/2016 – 11/30/2016: 1.56% | 12/01/2016 – 12/31/2016: 1.56%
Where are the %’s coming from?
Thank you2016-10-17 15:22, By: Bpower, IP: [67.177.186.52]

L8: Should I move my IRA from a trusted brokerage just to get 72t verification?>> I read somewhere that one of these has more flexibilityNo additional flexibility. One just produces a higher payout than the other.
>>What is RMDMinimum Distribution method. It will always produce the lowest payout, but must be recalculated annually based on attained age and account balance just like a Minimum Distribution during retirement.
>> Where are the %’s coming from?They are the maximum SEPP interest rates for a SEPP plan started during the months illustrated. Note the sentence that appears right above those rates “The maximum interest rates where the initial plan distribution occurs during the following time periods are” … The rates are published by the IRS.
Just my opinion, but based on your questions, you should probably do a lot more reading/studying before implementing your SEPP. Making a simple mistake can be very costly.2016-10-17 15:32, By: Gfw, IP: [205.178.65.222]

L9: Should I move my IRA from a trusted brokerage just to get 72t verification?Gfw,
Thank you for your feedback and info. I couldn’t agree with you more that I have more reading/studying to do, yet I’m not sure I will ever feel confident enough. In order to gain confidence, it appears I have to sell my soul i.e. move my $ to their control. That price is too high.2016-10-17 18:58, By: Bpower, IP: [67.177.186.52]

L10: Should I move my IRA from a trusted brokerage just to get 72t verification?As previously stated, there is nothing wrong with your current IRA Custodian – I wouldn’t worry about the code ‘2’ on a 1099. If you really need help, fine competent advisor, but not a commissioned sales person. Talk to your accountant.2016-10-17 21:24, By: Gfw, IP: [205.178.65.222]

L11: Should I move my IRA from a trusted brokerage just to get 72t verification?There are many accountants who can do the simple calculation in less than 5 minutes. In the regular method it is done once. I think it is ridiculous to waste significant money for one of these firms to make the calculation so you can sleep sounder.
I doubt if IRS has enough personnel to check any SEPP 72-T calculations, and quite frankly, I’ve never seen them even catch situations when someone “busts” the plan. Something else usually would trigger any audit because I don’t think the IRS tracks or compares year to year to know that the wrong amount was taken.2016-12-16 01:54, By: dlzallestaxes, IP: [173.59.24.3]

L9: Should I move my IRA from a trusted brokerage just to get 72t verification?Your life expectancy also has to be included in that calculation. Not sure if this was mentioned anywhere in this post.2016-12-15 23:18, By: Dee, IP: [173.216.239.224]

L7: Should I move my IRA from a trusted brokerage just to get 72t verification?I take an annual draw. It’s much easier. You can disperse the amount to yourself on a monthly basis. The draw has to be the exact same amount, on the exact same day each year.2016-12-15 23:14, By: Dee, IP: [173.216.239.224]

L8: Should I move my IRA from a trusted brokerage just to get 72t verification?You can take your SEPP distributions anytime during the year and your distribution pattern and dates can vary from year to year. It is critical that the 1099R report total distributions for the year exactly equal to your SEPP calculation except for stub years where you are allowed to pro rate by the month.
If you are using a very rare recalculation method, you must do your calculations at the same time every year using an account balance as of the same date, but that is for calculations not the actual distributions for the year.
Some people that a full distribution in January. If you do that you better be even more careful about budgeting your expenses because 12 months must pass before you can take another distribution.2016-12-15 23:58, By: Alan S, IP: [174.126.90.174]