L1: Starting date1-Would it be possible to set this up now before the end of September(3rd quarter)so I could receivea payment before the end of the month then receive the next at the end of dec and at the end of every quarter thereafter?
2-What date would I use for my calculation?
3-Re-the amount shown on these calculators-is that the maximum allowed-what I mean is if I set up payments less than what the calculator says just to be safe-is that ok?
2009-09-25 01:46, By: BobR, IP: [18.104.22.168]
L2: Starting dateI don’t think that you understand any of the regulations concerning the SEPP 72-T concept, or how this works procedurally.
1. You probably do not have time to get a SEPP 72-T plan implemented by 9/30.
2. You could use probably any month-end from 6/30 thru 8/31. You would use NO MORE THAN 120% of the federal interest rates for July or August.
3. You should use the “reverse calculator” to determine how much of your IRA account balances you must set aside to provide the ANNUAL AMOUNT that you will need.
4. What is your Date of Birth/Age ? Total IRA balances ?
5. Youshould probably start with an Octoberdistribution, which can be ONLY 3/12 of the calculated annual amount between Oct thru Dec, or 100% of your annual amount.
6. For 2010 and future years, you can take the annual distribution amount at any frequency, so long as the total for each calendar year EQUALS your annual amount.
7. You might want to get the book available thru this website, or hire a professional advisor who understands SEPP 72-T plans.
8. Why do you want/need monies from your IRA before reaching age 59 1/2, and will you need it until then, or for 5 years if you are 54 1/2 or older ?2009-09-25 03:59, By: dlzallestaxes, IP: [22.214.171.124]
L2: Starting dateNote: was about to post this, but dlz posted first. Nonetheless, am posting it anyway and you will see that the two posts are in almost total agreement. That should add some credibility to the posts in your mind.
1) I think you need to slow down and better understand the technicalities of a 72t plan before jumping into it.
There are only 4 business days left in September and if you order a distribution now, you have no way of knowing whether the distribution date will make it into Sept or whether it will be in October. If you wait a week, you can use the higher interest rate available for October than you could use in September.
You should also set up your payments at the beginning of a quarter rather than at the end so you will not have a late December payment that is made so late you have no time to address any shortfalls or errors. Starting in early October would be ideal. In your first year, you have the option of 3 months or the full 12 month distribution. Taking 3 months in early October gives you time to consider whether you wish to take the other 9 months or not by early December. If you need it you can order the other 9 months then.
2) Your calculation date can be any date prior to ordering the first distribution. But you are not bound to use an account balance that is for the same date. You can go back some, such as a statement for 8/31 or even 7/31 if you wish. You cannot use a date for the account balance that is prior to a distribution or contribution to the IRA or it will be invalid. You are best served to use the highest interest rate available, and that is the 3.45 rate for Sept. That rate is available for either an Oct or Nov starting distribution. There are other factors that go into your calculation that I will not go into here, as I said you need to research the entire process.
3) It is not OK to use an amount less than your calculation. However, you CAN use a lower interest rate to produce a lower calculation if you wish, but once you have your documented calculation, that is the exact amount that you must distribute every calendar year. The first year can be pro rated according to the month your first payment is distributed from the IRA if you wish. So distribution LESS will not be SAFE, it will bust your plan.
If you have enough IRA assets such that you do not need to allocate all of them to your SEPP plan, then use the reverse calculator and determine what balance you need using the highest interest rate and individual (not joint) lives to generate that amount. Allow for some increases in later years due to inflation by setting your distribution somewhat higher than what you need right now or next year. Then partition the IRA by direct transfer so that you have one IRA to use for the SEPP plan and another IRA that is outside the plan. That other IRA can then be used for emergency needs (subject to penalty) or even to start a second plan down the road if things change in a big way.
2009-09-25 04:09, By: Alan S., IP: [126.96.36.199]