Taking a SEPP from an IRA at a discount broker

L1: Taking a SEPP from an IRA at a discount brokerI am 55 as of 2/2007 and I would like to take out a distribution of substantially equal payments for a 5 year duration. I am currently unemployed and I want to make this as simple as possible and do not want to recalculate yearly. My IRA is at a discount brokerage firm and is valued at $355,802.09 as of 12/29/2007. My investments include a mix of stocks, bonds and cash. I do about15 to 20 trades a month and do not want any funds moved out of this account. I do not plan on adding to this IRA. I plan on using the Single Life Expectancy table and the fixed amortization method. When I use the 72T calculator, (using section 7520-AFR table) I come out with a yearly amount over a 5 year period of $24,642 per year. I am using 5.51% which is the 12/21/2006 calculation. My brokerage firm has a form with the information I need to fill out. Financial planners that I have spoken with want me to move the money into a separate account using a 5 year annuity which appears to be a big rip off. If I want to manage this myself, can’t I just use the May, 2007 interest rate when I plan on beginning these distributions and use the calculator from the web? Thanks for any help.
Ray
2007-03-14 19:13, By: Ray M, IP: [68.13.128.57]

L2: Taking a SEPP from an IRA at a discount brokerRay,
The max FED 120% midterm rate that you can use is the one from either 1 or 2 months prior to the month in which your first distribution is paid. I got first payment in March 2006, and used the JAN 2006 rate (a little higher than Feb 2006). My 72t was set up at Schwab. I filled out the form on this site with all the particulars, and also did not do recalculation to keep it simple. I chose two payments per year. They had no problem with it. If you opt for monthly payments, ask to have them done early in each month, so if something goes wrong in DEC, you can get on the phone and get the last payment of the year paid before 12/31. Ther is more involved, but this is a start. I”m sure others will comment. KEN2007-03-14 19:54, By: Ken, IP: [151.204.253.147]

L2: Taking a SEPP from an IRA at a discount brokerGood morning Ray:
I”m just a little confused by your post. It sounds like you are and probably have been doing all of your investment management by yoursef through a discount brokerage firm. My confusion comes in when your mentioned having spoken with financial planners. So are you DIY or do you have an advisor who uses a discount brokerage firm as your custodian? If youhave been doing everything yourself and are happy with the results, then why have you gone to a financial advisor and what assistance did you seek?
If you are DIY completely then yes, you can set up the SEPP yourself and leave your account as is. Like Ken indicated, the interest rate you use in the calculations must be either of the two months PRECEEDING your first distribution. So if you start in May, 2007, then you may choose either March or April to establish your interest rate for the calculations. Then simply complete the distribution forms provided by your IRA custodian / discount broker and you will be off and running.
Forget the 5-year annuity idea.
Jim2007-03-16 07:23, By: Jim, IP: [24.252.195.14]

L2: Taking a SEPP from an IRA at a discount brokerThanks Ken and Jim for your response. To address your question Jim, I have a Custodial account through my brokerage firm and Imake all my investment decisions as well as doing my own taxes. I sought the advise of a financial planner because I wasn”t sure of how to fill out all the paperwork for the 72Tand I was wondering what type of plan he might have. He was trying to get me to set up an account with another firm which was a direction that I didn”t want to go. I thought that setting up the 72T was more complex than it is. But it looks like from whatboth of you are saying,if I keep it simple and use the March or April interest rate for the May, 2007 starting date, fill out the paperwork from the Broker, make sure that they code it correctly for tax purposes, keep records as to howI arrived at my calculation and don”t make any changesuntil I am 59 1/2, it should be smooth sailing.Am I correct or am I missing something? Thanksfor your help.
2007-03-16 14:10, By: Ray M, IP: [68.13.128.57]

L2: Taking a SEPP from an IRA at a discount brokerRay,
As long as at least five years have passed since your first payment was received, and you are over 59 1/2, that is correct.Don”t add anything or take anything else out of that IRA you use for your SEPP until you have met those two milestones.If you don”t need as much asthe calculator yields, use the REVERSE calculator to figure out how large an IRA is needed to fund the annual amount you need (even if you will take it in monthly payments). Then,do a trustee to trustee transfer to a new second account the total amount you needfor the SEPP (aka 72t)and fill out the paperwork on that new account. If you stay with with the same custodian, make it clear to them that you need separate account#s that are in no way linked to each other so SEPP can be taken from one. If you choose a different combination of beneficiaries for each IRA, that might also help to keep them separate. That leaves the balance in other account available for a second 72t or a single withdrawal in an emergency, where you would just pay the 10% penalty (and regular taxes) on that emergency withdrawal. Don”t cringe.. a recent poster on a site I read started a 72t in Feb 2007, and already had to take additional money out, so they busted their plan. Also, since your 72t has to run until you are a bit older than 60, the other account can have withdrawals after you hit 59 1/2, with no penalty. Read many posts on the forum forthis site, and go back a ways to be fully versed. I studied it for about 8 months, just reading the new ones each day. That is how I got my info to setup the one I did last year. to do “speed viewing” In the forum page, at the top.. change the “# months showing” to at least 12, and check off”show entire message” (or something like that) and when screen refreshes, you can scroll up and down with your arrows (without using the page up or down) and view a ton of topics, then read the ones related to your situation. You have some time.. Good luck. KEN2007-03-16 14:41, By: Ken, IP: [151.199.45.134]

L2: Taking a SEPP from an IRA at a discount brokerRay,
The viewing option in the forum that I was trying to describe in my latest post.. to see lots of messages is “Show All Records” —not “display entire message”(along with changing the # of months to view). KEN2007-03-16 17:33, By: Ken, IP: [151.199.45.134]

L2: Taking a SEPP from an IRA at a discount brokerRay:
Follow Ken”s description and you”ll nail it!!!
Jim2007-03-17 11:33, By: Jim, IP: [24.252.195.14]