switching to Minimum Distribution Method
L1: switching to Minimum Distribution MethodHiI’m 56 I started a my SEPP Plan when I was 54 Amortization Method I’m think of switching to Minimum Distribution Method. I have 2 questions. under Minimum Distribution Method does it recalculate the first of each year? And do I have to go 5 more years or does it still end at 59 _?2009-04-26 13:34, By: stan, IP: [184.108.40.206]
L2: switching to Minimum Distribution MethodStan,
Your SEPP is done on a calendar year (as far as IRS is concerned) so you need to compute MIN DIST for each new year using prev. yr end balance, along with the age you will attainin the new year of your MIN DIST payment, and this has to continue each year, with newest year end balance, and new age you will attain, and you have to do it and supply that info to your custodian, with clear instructions about new payments amount for the calendar year. In your case, you only have to do it till the 5 years of payments (combined between AMORT and MIN DIST) and attaining at least 59 1/2, so the clock does not “start over”.
If you switch in 2009, use 12/31/2008 balance in this year’s calc, and age you will attain in 2009, but make sure you haven’t already taken out so much that it will exceed MIN DIST total method for 2009. It also presents the problem of little or no payments for the rest of this year, and small payments after that compared to what you had been receiving. You couldwait till 2010 to change. Many people being paid monthly have already taken out too much (using Amort) thru first 4 months of this year to make the switch, if their protfolio has suffered in this recession. Ken 2009-04-26 18:00, By: Ken, IP: [220.127.116.11]