Starting New SEPP Plan

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L1: Starting New SEPP PlanHello,
I will be establishing a new SEPP plan with a start date of 7/21/17. My date of birth is 7/20/64. Both my Traditional and Roth IRA retirement accounts resideat Schwab. My Traditional IRA balance as of 6/30/17 is $652,927.58. The Roth IRA has a balance of $141,291.84 as of 6/30/17. I plan to tap intothe Roth as a back up in case the annual SEPP distributions fall short of my needs. Hopefully that won’t happen. I’ve read previous posts to this forum and read through all of the very helpful instructions on this website and just want to make sure my understanding and calculations are correct before I officially “pull the trigger”.
Entering my 6/30/17 IRA balance into the SEPP calculator and using June’s maximum interest rate of 2.35%, yields an annual SEPP distribution of $29,634. I plan to take semi-annual distributions: 7/21 and 1/21 until I reach 59-1/2. For the initial distribution on 7/21/17, I plan to take 10/12 of the annual amount: $24,695. Each subsequent semi-annual distribution I plan to take $14,817.
Is there anything I need to instruct Schwab to do regarding the establishment of this SEPP plan? Regarding year-end documents that Schwab sends me, is there anything I need to ensure that they include? I’ve been using Jackson-Hewitt to prepare my income taxes. Is there anything special I should ensure they do when preparing my taxes? Is there anything else I should be considering?
Thanks so much for providing your expertise. I very much appreciate it!2017-07-01 16:20, By: BobS, IP: []

L2: Starting New SEPP PlanAdvise Schwab that you are starting a SEPP plan with your TIRA account on July 21st. Checking your calculations, it appears you are not using the calculator on this site as your annual distribution differs slightly. I get 29,633.59 using the fixed amortization method. Since you can use the May interest rate for a July start date and your interest rate could therefore be 2.45, your annual distribution would be 30,049.47 with the higher rate.
While you can pro rate your first annual distribution, it must be by the month, so you can only use 6/12 of the annual (50%), you cannot use 10/12. You might want to use the full annual amount for some protection against having to tap your Roth at some point instead of pro rating. If you want to buy some time on the pro rating decision, you could take out 50% in July, then decide in December whether to take the other 50% or not.
Schwab apparently no longer codes your 1099R to reflect the Box 7 exception code, so you will need to file Form 5329 each year to claim your SEPP penalty waiver. Your exception code is 02 on line 2 of the 5329. That is the only extra step for your tax return. Your 1099R box 1 amount will go on line 15a and 15b of Form 1040. However, if your TIRA contains basis from non deductible contributions that you have reported on Form 8606, your line 15b taxable amount will be less than 15a.2017-07-01 22:47, By: Alan S., IP: []

If CONVERSION, was any of it from CONVERSIONS in the past 5 years ? If so, then each conversion has a 5-year qualification period, and any conversions held less than 5 years are subject to taxable distributions of earnings before 5 years.
2017-07-02 05:24, By: dlzallestaxes, IP: []

L4: Starting New SEPP PlanThe Roth is a combination of contributions and conversions over the past 15 years or so. I’ve never (and don’t plan to) distributed any of the principal (conversion or contribution) that has been in the account less than 5 years.2017-07-02 16:33, By: BobS, IP: []

L3: Starting New SEPP PlanExactly what I needed to know. Thank you!2017-07-02 16:29, By: BobS, IP: []

L2: Starting New SEPP PlanCheck to see if Schwab will use code 2 for box 7 of the 1099. If not, make sure your person at Jackson Hewitt knows how to file for SEPP.2017-07-03 04:11, By: brkr12002, IP: []