SEPP Planning Pointers

If you have planning pointers that you think should be included, please forward them to us for consideration.

Determine your income needs. Before you start planning your SEPP plan, create a budget so that you will know how much income you will need during the period covered by the plan.
When using the calculators start with Single Life table and the maximum interest rate allowed. If the single life calculations (Use Joint Calculations=No) produce a higher than desired payment, consider breaking the IRA into multiple accounts using only one of the accounts to produce the desired SEPP payment. Other accounts can be used for emergencies or for establishing another SEPP at a later date.
SEPP Custodial Account. Consider using a brokerage Custodial Account for your SEPP plan that allows you to choose investments from any source that you desire. Reallocating your investments within your custodial account is different from doing a Partial Transfer to a new Custodian. Partial transfers were rejected by the IRS in PLR 200925044 & PLR 200720023.
Plan your distributions and don't use the first or last day of the month for a distribution date. A distribution on 12/31 leaves no room for errors and no way to correct an error should it occur. Using a distribution date around the 5th or 6th of the month leaves maximum flexibility.
Before you actually begin, know when your plan will end. Use our "First Payment Modificaton Date" calculator to get the date that you can change, end or modify your 72(t)/72(q) SEPP plan.
Retain all of your documentation for at least seven years after the plan ends. At a minimum, documentation should include information on the initial calculations, an official statement with the initial balance used in the calculations and a statement showing the date and amount of the initial distribution. In addition, you should keep annual statements showing the distribution amounts and timing of all distributions. You may also want to review our sample SEPP Form.
Most Important - It is your responsibility. Don't assume that someone else is taking care of your plan. Check the calculations and make sure that in early December of each year you check to make sure that you will have received the total annual distribution for the year. There may be a 60 days window to rollover excess distributions, but there is no window of time to take additional funds out of the plan after 12/31 to meet the required annual payment.

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SEPP Calculators: Distributions / Reverse / First Modificaton Date