Too late for this year?

L1: Too late for this year?I”m about to commit myself to a five year 72t plan after much hesitation. I”m 55 right now.Do you think it”s too late to get it all together and take the first distribution by the end of 2007? Are the required 72t payments based on five calendar years or five 12-month periods? Thanks for your advice.2007-12-18 19:16, By: Jimmy T., IP: [138.88.187.174]
L2: Too late for this year?If you don”t have all your details and data well understand by now and a close connection with your trustee in order to get a distribution done before Jan 1 I”d say you would be best to start the plan next year.
From an administrative point of view there isn”t anything really significant between starting in December or starting in Jan. The Jan start aligns with a calendar year for what ever that”s worth and eliminates the confusion with what is known as stub years (distributions that cover only part of a calendar year at the beginning and end of the 5 year plan). Of course waiting a month will change the interest rates you can pick from.
Regardless of the start date the plan will last 365*5 1 days.
Good luck with your plan.
John (my last distribution is coming in Jan!)2007-12-18 19:44, By: John, IP: [75.166.167.161]

L2: Too late for this year?Jimmy T,
If you can pull it off with your custodian, you can either take 1/12th of the calculated annual amount in 2007, or you can take the entire year”s calculated amount in DEC 2007, then next year, you must take the full amount over the course of the calendar year, so you could instruct your custodian to start making monthly payments in Jan if you took the full year payment in Dec 2007.If you don”t need the large sum of money or even the monthly payment in DEC, (will it push you to a higher tax bracket when added to your salary and other income in 2007?) then it might be easier to wait until Jan 2008 for first distribution. You cannot alter your payments until 5 years have passed after the first payment is made, and this website has a calculator that tells you when that will be if you plug in the info. Waiting till JAN might force a lower calculated payout number if doing Amortization or Annuitization as the max rate allowed (also on this site–don”t use the estimated number chart) seems to be falling. In DEC, you can use either the OCT 2007 or NOV 2007 posted mid term rate as your max guideline for calcs. Once you choose to take first payment in JAN, you must then choose from the NOV or DEC 2007 rate as max allowable in your calcs. My recollection is that NOV is lower than OCT, and DEC may be lower still. I hope this helps. I do think there is probably time for a Dec payment, but you need to check with your custodian. If you are not fully aware ofhow a 72t works, then take the extra time to preparebefore deciding on your first payout, as you are stuck with it for five years. One more point–I would not recommend recalculating each year, as I think it adds more complexity to the process. KEN2007-12-19 08:00, By: Ken, IP: [24.9.135.78]

L2: Too late for this year?Jimmy T.
Based on your questions I must conclude that you do not have all of the rules and procedures clear in your mind about operating a SEPP Plan. Also, most custodians use December 15th, or the last business day before the 15th, as their cut off for processing new plans or even making normal RMD”s for the year.I do not believe you have enough time to set up a plan and receive the first distribution in 2007.
My recommendation is to wait until January, 2008 for your first distribution. You can start putting together your “package” for the custodian now … assuming your wife doesn”t have other plans for you before the end of next week. Your plan start date is the date the custodian makes the first distribution. Once you know that date, plug it into the “Last date” calculator on this site and you will know the date afterwhich you can make changes to your plan.
BTW, you didn”t state whether your assets are in an IRA or a company K-plan. Since your age is 55 now and if your assets are still in the company K-plan and you have separated from that company, and if that plan allows periodic distributions, then you don”t need 72(t) for the exception to the 10% penalty rule. Check out the FAQ”s.
Jim2007-12-19 08:25, By: Jim, IP: [24.252.195.14]

L2: Too late for this year?Thanks everyone for you advice and comments. I have decided to wait until January to begin my SEPP program. It turns out that my taxable income was extremely low this year, so I thought I might get some tax savings from the lower bracket by starting the SEPP this year. But you”ve convinved me that it”s better to prepare the SEPP carefully before initiating it.2007-12-19 08:43, By: Jimmy T., IP: [138.88.187.174]

L2: Too late for this year?Jimmy T. — You did not answer if you are talking about an IRA or a 401-K. If the 401-K, will you be continuing work with the same employer, retiring, or changing employers ?2007-12-19 10:45, By: dlzallestaxes, IP: [141.152.248.162]

L2: Too late for this year?Sorry I didn”t answer your question. I have an IRA at Vanguard. Would set up a separate IRA there for the SEPP using part of my IRA funds. Or is there another company (Fidelity?) that handles SEPPs better than Vanguard? Thanks again.2007-12-19 13:23, By: Jimmy T., IP: [138.88.187.174]

L2: Too late for this year?Choose your investments first, then focus on custodian issues. Fact is,custodial actionsshould be similar with all of the mutual fund companies. If you use a “brokerage platform” to hold your investments, then you have more flexibility to manage the assets within your portfolio. You can use one fund family for both SEPP and non-SEPP IRA”s, but be sure you have SEPARATE accounts with distinct account numbers for each type of account.
Jim2007-12-19 13:46, By: Jim, IP: [24.252.195.14]

L2: Too late for this year?Vanguard has an outstanding reputation for handling SEPP 72-T accounts. Check other postings on this forum.
As far as investments, I don”t think you”ll find enough difference between Fidelity and Vanguard performance on similar mutual funds to use that as a criteria if one does a better job of handling these types of plans.2007-12-19 14:25, By: dlzallestaxes, IP: [141.152.248.162]

L2: Too late for this year?Thanks again for the advice, folks. I”m sure I”ll be back when I get rolling with my SEPP plans in January. Happy holidays to all.2007-12-20 11:35, By: Jimmy T., IP: [138.88.187.174]

L2: January 2008 72(t) RateHi Gordon,
The link listed did not work for me. KEN2007-12-19 12:30, By: Ken, IP: [24.9.135.78]

L2: January 2008 72(t) RateKey Thanks – it should be working now!2007-12-19 13:48, By: Gfw, IP: [216.80.125.206]