What constitutes a Year?
L1: What constitutes a Year?In July of 2008, I started my SEPP/72t. My annual calculated amount is $60K per year. On July 1, 2008, I received my first payment of $5K. Because therewere just 6 months remaining in the beginning year (2008)of the SEPP, was I limited to taking just $30K or could I have taken any amount up to $60K prior to Dec. 31, 2008?
Beginning in 2009, which would be the first “full year” I would take the full $60K by 12/31/09 in any increments (equal or not), as long as in aggregate they equal $60K.
Is the above all within 72t guidelines to avoid the 10% penalty and accrued interest?
For the purposes of 72t’s,is a year calculated from thebeginning monthof 72t payments (i.e. 12 months later), or is it a calendar year,Jan. through Dec.? Provided that I’ll be older than 59.5 in a couple of years, will my SEPP end on June, 30, 2013? What are my limitations on IRA distributions in that year (2013)?
Sorry to keep asking so many questions.2009-05-20 20:31, By: Jimbo, IP: [184.108.40.206]
L2: What constitutes a Year?For 2008, you could have taken out 30,000 or 60,000, but no other amount.
These are calendar year plans, so your second paragraph is correct. This year you must take out 60,000, but can spread it out any way you wish.
Since you will reach 59.5 prior to reaching your 5 year modification date, you should plan on taking out 60 months of distributions. Therefore, in 2013, you should take out 30,000, with your last monthly check in June, 2013 if you stick with the monthly format.
If you received your first payment on 7/1/2008, then add a couple days for a safety marginplus 5 years to that date to determine your modification date. Therefore, after 7/3/2013 you can take out as little or as much as youwish because your SEPP will have ended.2009-05-20 22:18, By: Alan S., IP: [220.127.116.11]
L3: What constitutes a Year?Where is the documentation from the IRS stating that a 72t is based on a calendar year? Thanks….
2009-06-25 13:21, By: Budman, IP: [18.104.22.168]
L4: What constitutes a Year?Since you are taxed on a calendar year what would make you think that it is anything other than a calendar year?
The only time that a non-calendar year is used with a SEPP planis to determine when the 5-year rule has been met.2009-06-25 13:37, By: Gfw, IP: [22.214.171.124]
L5: What constitutes a Year?Since the tax code defines “taxable year” as the accounting period used by the individual, a 72t plan should be valid if it follows the same fiscal year that taxpayer uses to file his return. Of course, if you elect a fiscal year reporting period for your 1040 rather than a calendar year, you would have to deal with 1099R forms that were out of sync and possibly other unintended consequences. Therefore, most people are probably inviting problems if they initiate a plan while filing on a fiscal year basis.
http://www.fourmilab.ch/ustax/www/t26-A-1-E-I-441.html2009-06-25 20:03, By: Alan S., IP: [126.96.36.199]
L6: What constitutes a Year?It will probably cost you several thousand dollars to have a professional prepare the paperwork for you to go thru a “change of accounting period” initially, and several thousand each year for a professional to prepare your tax returns because your fiscal year will be out of sync with all of the tax reporting income ( Interest, Dividneds, Capital Gains, Wages, Pass-Through Income from Partnerships/S Corps/Trusts, etc.).
If you came to me, I’d try to talk you out of it !!!!2009-06-25 21:21, By: dlzallestaxes, IP: [188.8.131.52]