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Final Thoughts on 72(t)/SEPP Plans


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Keep in mind that mistakes can be costly : For SEPP distributions, any change in the payment schedule (changing the mode of the payment from annual to monthly is not a change)after you begin taking withdrawals may subject you to the 10% penalty tax, plus interest, applied retroactively to all previous withdrawals. 

Be conservative in your estimates - The longer the time period that you have to the end of your plan, the more conservative you may want to be.

Don't be part of a SEPP horror story - Establish a plan that will take advantage of past PLRs and almost guarantee that your SEPP will never go bust - yes it is possible, but it must be planned for in advance.

Consult an adviser to the extent you consider necessary - mistakes can be very costly. You may be a very good engineer, computer consultant or teacher - but that doesn't make you an expert on the IRC.

The best advice is to use this site to do estimates and become knowledgeable on the subject, then "Hire a Pro" to do the work.

Have more questions? Please post them in our Discussion Forum