Withdrawal Frequency

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L1: Withdrawal Frequency
Hello. I am considering the start ofa SEPP in October 2011 using the Amoritization calculation method. DOB 10/06/1960. Can the initial withdrawal frequency show annually, starting October 15, 2011, to get a full year of distributionsfor 2011 and then
be changed in January 2012 to a monthly frequency for the remainder of the plan?
2011-09-24 20:09, By: Mule, IP: []

L2: Withdrawal Frequency
Yes, you can do that.
When you set up the monthlies next year, use a distribution date fairly early each month so you will have time to make any corrective transactions in December if necessary.
2011-09-25 01:42, By: Alan S., IP: []

L3: Withdrawal Frequency
Agree with Alan, but I would recommend NOT using the 1st or 2nd of the month. If the 1st or 2nd of January (as it does this year) falls on a weekend, some brokers make the withdrawal/deposit on the Friday before 12/31/xx which would then give you the equivalent
of13 monthly withdrawals that year. I would look to set up a date around the 4th or 5th — as Alan states “fairly early each month”. The 4th or 5th will still give you time to make any corrections in December if needed.
2011-09-25 12:08, By: meb24, IP: []

L4: Withdrawal Frequency
Thank you both so much for your quick responses. This is a great forum!
2011-09-25 19:07, By: Mule, IP: []

L3: Withdrawal Frequency
I have a similar question for a new SEPP that I am starting in October with the first annual distribution (single distribution for full year’s amount) to take place on Oct 15 2011. However, I would like to stick with a single annual distribution but for
2012 and subsequent years to have the distribution occur on Mar 15 2012, Mar 15 2013, etc. instead of in Oct.
My broker is uncertain whether choosing a different month for subsequent distributions constitutes a modification and potentially subject to IRS penalties. The distribution form is worded as follows:
“I would like my withdrawals made on the frequency indicated below, starting (MM/DD/YY)
Frequency _ Monthly OR _ Other, on the following months:
(Each month is listed with a box for checking off)”

As an aside, my broker will only distribute the maximum amount as calculated based on the AFR, account balance, etc. and not any other lesser amount.
My dob is 2/22/56 and I am using the amortization method. Also, will I have to take mandatory distributions through Oct 2016 to cover 5 full years (in effect, 6 years of distributions starting Oct 2011 and subsequent distributions on Mar as I would like)
since my first distribution will occur in Oct 2011?
2011-09-27 22:59, By: AKC-11, IP: []

L4: Withdrawal Frequency
You can change the distribution date every year if you wish. The critical issue is that the annual total distributed in each calendar year equal the correct amount per your calculation.
Since you are taking a full annual distribution for 2011, you do not have to take out anything in 2016 prior to your 10/2016 modification date. You will have taken out 60 months worth in total by 12/31/2015.
The broker’s form appears to lock you in to the same month every year, and that is not necessary. Just tell them you intend to change the month to March in 2012 and that you will handle any problems with the IRS. They probably
are not going to provide you with the 1099R exception code anyway.

2011-09-27 23:15, By: Alan S., IP: []