Taxes to withhold when taking SEPP Distributions

L1: Taxes to withhold when taking SEPP DistributionsI plan to begin a SEPP on March 15, 2013.
DOB January 8, 1962
IRA Amount used–$823,000
Interest rate used (estimated I know) 1.21
Method of Distribution–Amortization
Yearly Amount of Distribution using your calculator–$30,174.57
My trustee/custodian recognizes the SEPP and will code it 2 on the 1099.
Question.
How do I calculate the taxes on the $30,174.57. I understand distributionswill be ordinary income, so lets say I owe a total of 25% in taxes. Myidea is to take 25% of the $30,174.57, put it in a savings account and pay the taxes when due. Does this sound like a solid plan. Any suggestions on this would be very helpful.2013-01-29 12:24, By: Greg, IP: [204.248.119.59]

L2: Taxes to withhold when taking SEPP DistributionsFind out if your custodian will do it for you. I take monthly distributions. My custodian takes out the 25% and sends it to the IRS, another 6% and sends it to the state revenue dept., and then sends the balance to me. They do this every month for me.2013-01-29 15:20, By: The Red Baron, IP: [166.137.101.164]

L3: Taxes to withhold when taking SEPP DistributionsI agree with the red baron. My 2 different SEPP plans with two different custodians (that at one point were running simultaneously, and are now both completed) had the taxes (state and Fed) taken out with each payment I received, using percentages that I supplied. I tried doing Qtrly estimates (pmnts to Fed) the first year, and it was not easy with 4 deadlines to meet, and paperwork to fill out, and those deadlines were not all 3 months apart, so I was late with one. Not worth the hassle for the money you may earn in a savings account with that money (in my opinion). Ken2013-01-29 16:04, By: Ken, IP: [100.0.32.145]

L4: Taxes to withhold when taking SEPP DistributionsSome states, like PA, do not tax retirement benefits after 59 1/2, but do tax them if taken before 59 1/2, like in a SEPP. PA has a “cost recovery” approach, so even < 59 1/2 it is not subject to PA tax until you have "recovered" the total cost of your contributions. In most cases, it won't be tax in PA because you are recovering your cost during the years before 59 1/2. Check the tax situation for your state. I agree that it makes sense to have the federal and state income taxes withheld at the source, and to be remitted directly by them. It avoids the temptation to spend the money when it comes, or is sitting in an account when an emergency arises, and then not having it when the 4 estimated payments are due.2013-01-29 16:21, By: dlzallestaxes, IP: [71.175.100.168]