The Kitsap2 thread
L1: The Kitsap2 threadTom,
Post your info here for others to comment on, or start another thread. I think we hyjacked Red Baron’s enough. Sorry Baron!
To answer your last question. A SEPP must run the longer of 5 years or until you’re 59.5. Because your 59.5 birthdate runs into the 6th year your plan is not considered a 5 year plan.
Red Baron turned 59.5 prior to 5 years, and must abide by different criteria, but at least 5 years. Find IRS form Publication 590, and download it for your reading pleasure. between it, and mainly this board I started a SEPP last July and feel confident about it.2013-02-19 00:53, By: Scott, IP: [126.96.36.199]
L2: The Kitsap2 threadI see, that makes sense. And again, a big apology to, Red Baron, for the hijacking. However, seeing his situation, and my probable situation, was a great learning experience. For those just joining/viewing this “new” thread, here are my particulars, again:
First Distribution (Tentatively): 3/15/2013
5 Year Date: 3/15/2018
First Modification Date: 4/25/2018
2013-02-19 01:09, By: kitsap2, IP: [188.8.131.52]
L3: The Kitsap2 threadI am just about ready to pull the trigger on my SEPP.
I would just like to submit, for comment, on what I’ve determined to be my plan.
First Distribution (Tentatively): 3/15/2013
5 Year Date: 3/15/2018
First Modification Date (point when reaching 59.5 yrs): 4/25/2018
Is it preferrable to prorate my first year, or does it matter, will taking the full amount cause a problem down the road? I understand, from Scott’s previous help, that when reaching my final year, 2018, that it would be preferrable to take out a prorated amount, up to April (four months), and then, if possible, not take out anything more until the following year, for simplicity’s sake, with the IRS.
Thanks in advance,
2013-03-03 17:46, By: kitsap2, IP: [184.108.40.206]
L4: The Kitsap2 threadInteresting timing – start before 04/24 and you have an age 59.5 plan. Start any later and you have a 5-year plan.
What you do in the last year may depend on what you do in the 1st year. Whatever you do, make sure that you take a minimum of 5 times the planned annual distribution over the time period.
5= 03/15 2017
Do you have to take a payment in 2018? Not really. Can you take a payment in 2018? Yes, but I would wait until after the 4/25/2018 date.
Hope this helps.2013-03-03 20:44, By: Gfw, IP: [220.127.116.11]
L5: The Kitsap2 threadIn 2018, before 3/15/18,you can take -0-, a full annual amount, or 3 MONTHS’ WORTH (3/12 of the annual) not 4 months’ worth.
After 4/25/2018, you can take whatever amount you want. If you do not need the money in 2018, you can take -0- after 3/25/18, based upon your cash needs, and your tax situation.
In late 2017, or after you do your 2017 tax return in 2018, you should meet with a tax and/or financial professional to PLAN your retirement situation, integrated with your SS benefits, taking into consideration that SS benefits are 32% higher at 70 vs 66, and 70% higher at 70 vs 62.2013-03-03 22:00, By: dlzallestaxes, IP: [18.104.22.168]
L6: The Kitsap2 threadThanks,dlzallestaxes!
From where I currently stand, I think it would be easier for me to not take any payments, in 2018, until after 4/25, when my affair with SEPP is completed.
Fortunately, I’m not associated with Social Security. I was lucky enough to fall into CSRS.
Tom2013-03-03 22:25, By: kitsap2, IP: [22.214.171.124]
L5: The Kitsap2 threadThanks for your input, Gfw! I appreciate it.
When you included the dates of 3/15, and the respective follow on years, I take it that I should wait until that date (3/15) to draw down my funds, or does the IRS not care about the actual date, and only the year in which it occurs (for the following years)?
Right now, I’m seeing that it’s OK to take out the full, annual amount on 3/15/2013. Followed by the same amounts (unless I drop down to Minimum Distribution) in 2014, 15, 16 & 17. And that it doesn’t matter what month of the year I take those amounts. Did I read this correctly?
Tom2013-03-03 22:18, By: kitsap2, IP: [126.96.36.199]
L6: The Kitsap2 threadThey care about the actual date – the plan starts on the date of the first distribution, not the year of the first distribution.
If you start on another date, merely substitute the actual date with the dates that I previously posted. If after 4/25, you have a 5-year plan and not a to a age 59.5 plan and there is a difference. 2013-03-03 23:18, By: Gfw, IP: [188.8.131.52]
L7: The Kitsap2 threadThis may sound like a “stupid” question but, you really don’t know the start date, in advance, of your first distribution, until you actually have documentation that shows when the disbursement was made, correct?
Tom2013-03-09 17:03, By: kitsap2, IP: [184.108.40.206]
L8: The Kitsap2 threadI think I may have answered my question. I looking over the, IRA Distribution Request Form, from my IRA custodian, I see I have the option of selecting a start date and, also, the possibility of withdrawing/transferring the funds, myself, from my brokerage account, though I’m suspicious of that much control.
I’ll find out for sure after a phone call.
Tom2013-03-09 17:25, By: kitsap2, IP: [220.127.116.11]
L8: The Kitsap2 threadYou can request a date from the custodian, but you may or may not get it. Best to plan for a withdrawal in the first 15 to 20 days of the month just to make sure.2013-03-09 18:07, By: gfw, IP: [18.104.22.168]
L9: The Kitsap2 threadThanks, gfw!
I have one more question for you, regarding your previous guidance. If my first distribution is, for example’s sake, March 15th, 2013, do I have to wait until March 15th, 2014, for the next distribution, or can I take a distribution on Jan 15th, or February 15th, 2014?
Just a little confused on that issue.
Thanks for all of your help, so far!
Tom2013-03-09 18:36, By: kitsap2, IP: [22.214.171.124]
L10: The Kitsap2 threadIt depends…
If you are working with a 5 year plan, and you plan on taking annual distributions, I would still to the 03/15 date.
If you are working with a to age 59.5 plan, it makes little difference as long as you take the annual distribution before 12/31 – possible exceptions are 1st and last year.2013-03-09 18:48, By: Gfw, IP: [126.96.36.199]
L11: The Kitsap2 threadAgain, thank you, gfw!
I’m feeling pretty comfortable with starting my plan now, making it a “59.5 year plan”, and making annual (one time withdrawals) in 2013, 14, 15, 16, & 2017. I plan on using Minimum Distribution, with the associated annual recalculations.
I am planning on using February’s end of month, documented brokerage statement for this year, and December 31st, 2013 statement, for 2014, along with the aging of one more year.
Appreciate all your help.
Tom2013-03-10 21:25, By: kitsap2, IP: [188.8.131.52]
L12: The Kitsap2 threadOne more question:
When using the, Minimum Distribution Method, must I use the account valuation date of Dec 31, 2012? Or, may I use 02/28/2013, followed by Dec 31st, for the following years?
Tom2013-03-11 21:32, By: kitsap2, IP: [184.108.40.206]
L13: The Kitsap2 threadCheck…http://72t.net/72t/IRS/Revenue/Ruling/2002-62
Look for Section 2.02(d) Account balance2013-03-11 21:56, By: Gfw, IP: [220.127.116.11]
L14: The Kitsap2 threadThanks, gfw, I was just looking over IRB 2002-42, when I received your response. I understand now.
Tom2013-03-11 22:01, By: kitsap2, IP: [18.104.22.168]
L15: The Kitsap2 threadI would like to thank everyone who contributed to answering my many questions, and providing pointers to help me set up my SEPP Plan.
I pulled the trigger and received my first distribution on, 3/20/2013. I am using the RMD plan, and feel very confident going forward.
Thanks to all!
Tom2013-03-24 16:39, By: kitsap2, IP: [22.214.171.124]
L6: The Kitsap2 threadWe usually recommend that people not take their distributions once a year because there will be a greater probability that they will bust their plan before the end. We usually suggest monthly or quarterly distributions.
Regardless how frequently you take distributions in any year, you can change the frequency and amounts any or every year, so long as the same amount is taken every calendar year (unless you take prorated amounts the first and last calendar year.2013-03-04 00:25, By: dlzallestaxes, IP: [126.96.36.199]