Starting to plan
L1: Starting to plan
Laying the groundwork for husband’s retirement.
His d.o.b: 3/31/1965
Planned retirement date: 9/30/2018
Will use about 50% of his retirement assets into IRA for 72t purposes, leaving the rest to grow hopefully untouched till 59 1/2.
My question is about timing of first/last payments. Even after using the calculator I’m still a bit confused.
Assuming we can get through 6 months to a year after his retirement without needing to access these funds, should we:
Start the 72t (get first SEPP) in mid-April 2019, mid-October 2019, or some other date? The goal is to use it just for 5 years if possible.
Thanks in advance- I’ve learned a lot from this forum! (Also, have yet to find a so-called tax professional who has a clue about 72t’s so really want to do it on our own with what we’ve learned here and elsewhere).
2018-03-23 20:49, By: rrig5, IP: [126.96.36.199]
L2: Starting to plan
It doesn’t matter too much. He will be 59 1/2 on 9/30/2024. No matter when you start in 2019, the plan will end on that date, unless you start after 10/1/2019.
Whenever you start in 2019, you can take a full annual distribution. But, if you have other high taxable income in 2019, then you might want to wait until Sept 15, 2019 to start, and take an allocated 1/3 of the annual distribution. If you start in mid-Oct 2019, the plan cannot end on 9/30/2024.
2018-03-23 21:08, By: dlzallestaxes, IP: [188.8.131.52]
L3: Starting to plan
Thanks for the prompt response!
That’s one of the things I’m not clear about (splitting the year). When I do the calculations, I wasn’t sure if you needed to take an entire year distribution if any distribution happened to fall in that calendar year. (e.g. 6 full years instead of 5, or worse, 7 instead of 6)
So if we start in mid-Sep. 2019, do we take a partial for 2019, then full for 2020-2013, and 3/4 for 2024?
2018-03-23 23:29, By: rrig5, IP: [184.108.40.206]
L4: Starting to plan
In principle, yes.
But you should look at your tax situation for the 1st calendar year. If it is otherwise high, then you would want to take a low amount. With a Sept start, you take 4/12, while starting in Dec, you take 1/12, but with either start you have the option of taking a full year.
Similarly, you should project what 2024 taxable income will look like.
You cannot make this decision without doing planning for all years up front.
2018-03-24 00:43, By: dlzallestaxes, IP: [220.127.116.11]
L5: Starting to plan
OK thanks. I’m thinking I should be able to mitigate/manipulate some of the tax issues by adding more to my own pre-tax retirement accounts as necessary.
2018-03-25 12:21, By: rrig5, IP: [18.104.22.168]