Witdrawal without SEPP

L1: Witdrawal without SEPPI am 55 years old and have an IRA with American Funds from a previous employer that closed and a vested 401k with a new employer . The question is : In Jan 2007, if I quit working ,could I transfer my IRA and 401K to a new custodian ( a Federal Credit Union) as an IRA and begin taking monthly withdrawals without using a SEPP plan and no penalty ? 2007-02-06 11:23, By: rebel, IP: [208.62.58.78]
L2: Witdrawal without SEPPShort answer is “No.”
When you retire, quit or get fired either during the year you turn age 55, or if you are older when these events occur, then you can take distributions from the K-plan without the early distribution penalty. However, if you transfer the K-plan to an IRA, you lose the age 55 exemption right and SEPP is the only way to avoid the penalty because you now have an IRA and not a 401(k). Be sure to check with your HR department at your last employer to be sure the allowed distribution options will work for you to utilize the age 55 rule.
Jim2007-02-06 12:05, By: Jim, IP: [70.184.2.72]

L2: Witdrawal without SEPPThat what I thought . Ok, if I transfer both accounts to my credit union as an IRA and use the 72t caculator to determine monthly withdrawals for SEPP can the monthly amount be increased higher than the caculated amount to pay for medical insurance premiums or the medical plan deductible.?
2007-02-06 12:21, By: rebel, IP: [208.62.58.78]

L2: Witdrawal without SEPPI hate to sound like a broken record, but, short answer, no.
Once you calculate your annual SEPP Plan distribution amount, you are stuck with that. Only exception is to change from either annuitization or amortization method to the usually smaller distribution amount using RMD method. The only exceptions to get out of a SEPP Plan before completion is death or disability, which are not good options. My suggestion is to set up two IRA”s in SEPARATE ACCOUNTS! One IRA is for SEPP and the other is for emergencies like the reasons you mentioned, or just to be able to get at some funds and pay the penalty.
It sounds like you are just starting out on your 72(t) education. Go the the FAQ”s on this site and read back into some previous posts. You”ll learn a lot. Also, buy Bill Stecker”s book through this site.
Jim
PS: Let me elaborate my emphasis on setting up separate accounts. Some time back we had someone telling how he had set up SEPP “designated” mutual funds and non-SEPP “designated” mutual funds, all within the same IRA account with one account number. The IRS didn”t buy his concept when the Form 1099-R showed excess distributions one year. His explanation was that he took money from the non-SEPP “designated” mutual funds to pay expenses formedical reasons using that exception guide. Bottom line is that one account number houses all of the SEPP assets and a different account number houses all of the non-SEPP assets.2007-02-06 12:45, By: Jim, IP: [70.184.2.72]

L2: Witdrawal without SEPP
Note that the IRS did not intend to limit taxpayers to these three methods presented in notice 89-25 (letter rulings 9008073 and 9615042). Any reasonable method of calculation satisfies the requirements of IRC section 72(t)(2)(A)(iv) (letter ruling 8921098).
Jim
It was this statement that I found that led me to believe I could use a different amount than the 72t caculator..

2007-02-06 13:43, By: rebel, IP: [208.62.58.78]

L2: Witdrawal without SEPPYou can as long as the IRS approves the method – problem is that the only three methods that have been approved appeared in IRS Notice 89-25 and these same three methods were again re-stated in Rev.Rul 2002-62.
Sorry, but at the present time the only methods that the IRS considers reasonable are the three methods in 2002-62.
You could file for your own PLR, but it isn”t cheap.2007-02-06 13:49, By: Gfw, IP: [74.136.109.63]