Things to be done to set up SEPP
L1: Things to be done to set up SEPPI’m about to set up my SEPP and I want to make sure I’ve done everything properly before I take my distribution. I have gathered documents from my 3 accounts showing the balances, printed the page from the IRS showing the interest rate I’m going to use, and documented that I’m using the amortization method with the single life expectancy table. Is there anything else I need to do? Can I just print the results of one of the 72t calculators to be found online using the above inputs or do I need to show some more detailed calculations? Someone mentioned notifying your broker – is that necessary and what form would that take (e.g., fill out a form, notify him by phone, etc.?) Is there anything else I should do that I’ve neglected to mention here?2009-11-25 15:43, By: Jeff, IP: [18.104.22.168]
L2: Things to be done to set up SEPP
Sounds to me as if you are off to a good start.
When I started my SEPP in 2005, I used a 3″ 3-ring binder to hold ALL of the paperwork that related to my SEPP in any way. This included a written statement of what I was doing and the method that I was using to calculate my SEPP payments. I included the start and end dates, the custodian, and the amount that was in my 401k plan to be rolled into an IRA. A printout of the then current interest rate was appended as a separate page. I also used those plastic tab sheets to create sections in this binder for various things, such as correspondence, 401k plan ending statement, IRA annual statements, etc. I also printed copies of any info that was related to my SEPP plan that was received electronically. This may be over-kill but at least I have all of the info in one place and it is easy to use. I also used my PC and scanner to make an electronic version of this, which is stored in a bank safety deposit box. This is info that I simply cannot afford to lose, so care was taken to ensure that it would not be lost to fire, theft, flood, etc.
Also, Vanguard has a nice brochure that you can download from their web site. If you go to their web site, just type SEPP into the search window and it will come up with a few documents. One of them is a 20 page Adobe Acrobat file that describes what a SEPP is, how they are set up, and how the calculations are done. I went through their worksheets, did the calculation for the amortization method and calculated the amount that could be withdrawn each year. I then did the same calculation on this web site using one of the SEPP calculators and the same input info. The answers agreed to within about $0.50 on a $33k annual distribution. That is nothing more than either a rounding error or a difference in the number of decimal places used in the calculations. Having the numbers come out this close gave me confidence that the numbers were correct.
At that time, Vanguard had a form that anyone wanting to start a SEPP with them could use to open the account. I don’t know if they are still using this or not. Anyway, I filled out the form, got an account number, and then wrestled with my 401k plan custodian to get the money into that account. That was about a 10-week multi-phone- call process. In the end, the 401k custodian finally sent me a check for the full amount of my 401k plan money. The check was not made out to me but to Vanguard for my benefit. Because the check was not made out to me, there was no need to withhold 20% of the amount for possible federal income taxes.2009-11-27 02:30, By: Ed_B, IP: [22.214.171.124]