72t on the Net

Concerning Form 5329:

Note that the proper Distribution Code for a SEPP in Box 7 of Form 1099R is "2", and this includes ALL types of early distribution penalty exceptions.However, you asked about Form 5329, which is a form that the taxpayer completes. If you need a 5329 to change the code from the 1099R, the SEPP code is "02". All the exception codes entered by the tax - continued...

last year withdrawl amount

John,From your post I take it that this month's distribution will be your 60th, or through this month you will have taken out 5 times your annual distribution amount in total. If so, you have various choices:1) You can stop distributions after your 60th month since you also turn 59.5 this year2) You can continue your monthly distributions through - continued...

last year withdrawl amount

Start by using the First Modification Date calculatorto make sure that you have the actual ending date. If you have taken at a minimum 5 times the calculated annual withdrawal and 365 days times 5 years plus 2 days has passed since the date of the 1st distribution, then the 5 -year rule has been met.If taking monthly withdrawals and you have indeed - continued...

Using 8 year SPIA???

I'm just looking at some quick numbers, but $275,000 earning 1.3419% will pay out on an amortization schedule about $36,000 annually at the beginning of each year. If you invest in nothing more than a 7-year treasury, you can earn 3% per year and by going to a 10-year treasury, the interest rate will jump to about 3.59% - these rates are a - continued...

last year withdrawl amount

I turn 59.5 in august of this year and have 5 years of sepp withdrawls in february. I take monthly withdrawls. By august I won,t have taken a full years withdrawl yet but my plan will be over. Do I need to take a full years withdrawl or can it be prorated to the time I turn 59.5thanks John - continued...

Using 8 year SPIA???

Received a proposal from a financial advisor and would like some input if this will work for 72t. It does not seem to meet the 72t rules as I understand them but would like additional comments. Age 52 and need to generate about $36K/year income from $800k (IRA account). They proposed using a ladder approach and starting out using an 8 year $259K - continued...

Concerning Form 5329:

Instructions to the 2009 Form 5329 can be found in our Resources/Links page. - continued...

Concerning Form 5329:

In tax year 2008 the exception code on form 5329 for "Distributions made as part of a series of substantially equal periodic payments..." was number "2." Does that still apply for tax year 2009? - continued...

IRA Transfer

The issue here is not that you would be taxed, since you rolled over the funds. The issue is that they should not have issued a 1099R if the move was made by direct transfer. Re issue with a -0- does not help as you will still have to report a rollover on line 15 of Form 1040. This will cause the IRS to count this as a rollover when it should have - continued...

IRA Transfer

Just to follow up, I got IB to agree to issue a corrected 1099R and show the distributive amount at 0. Was surprised they did not give me a hard time. - continued...

72T / SEPP

For the definition of age 55, IRC Notice 87-13 states... "such separation from service occurred during or after the calendar year in which the employee attained age 55."The age 55 rule only applies to distributions made from the employer's plan. Start by talking to your employer or as Ken stated, look in plan's Summary Plan Description. If your - continued...

72T / SEPP

I think the experts that post on this site will tell you that as long as you retire at least in the same calendar year that you turn 55 .. even if you leave during that year before that 55th birthday, as long as the birthday occurs before the end of that same year, you will be able to take out payments without penalty from your 401K. You may have - continued...

72T / SEPP

When separated from your employer earlier than age 55, is it safe to begin receiving SEPP payments from an IRA? I am a few months short of 55 and my employment is terminating next month. Should I wait until 55 to roll over my lump sum pension to an IRA if I am planning to receive SEPP? - continued...

Piecemeal 72T

Alan... good catch. If seperation occurred at age 55 and the funds never left the 401(k) (no IRA involved) then there really was no SEPP to begin with. - continued...

Piecemeal 72T

You are stating here that you took your distributions directly from the 401k plan and say nothing about an IRA rollover.If you separated from service in the year you turned 55 or later, and that appears to be the case here, you never needed a SEPP in the first place because you qualified for the age 55 separation exception from the penalty.Your 109 - continued...

72t and rmd

There is nothing that states when in the year a distribution must occur. Just as it could occur in January, it could also occur at the end of December. As the 5-year requirement has been more than met, the plan ends at your age 59.5. Yoe, my answer would have been different had the 5-year rule not been met. - continued...

72t and rmd

From your repaonse, I see that after 59.5 I can take any amount I want; however, I thought that I had to take the RMD 72t amount of $3,901 in 2010 before 59.5 just as I would have to take 3 monthly payments in 2010 for 1,2, and 3of 2010 if I was using the annuitization method. Am I to understand that no rmd 72t withdrawal is required in the year in - continued...

72t and rmd

Since you have already met the 5 year rule, all you have to worry about is the age 59.5 rule. You have a few options: 1) You could take the $3,901; or 2) you could take nothing until after you reach age 59.5.After age 59.5 (the SEPP ends at age 59.5) you can take any amount you want until you run into the Minimum distribution rules at age 70.5. - continued...

72t and rmd

Started 72t 10 yrs ago and switched to the rmd method few yrs back when IRS allowed it. Will be 59.5 on 3-17-2010 and rmd amount I need to take in 2010 is $3,901 based on 2009 yr end value.Am I correct in thinking that I need to take the $3,901 before 3-17-10;also and that after 3-17-10, I can withdraw any amount from the IRA so I'd get two 1099' - continued...

Piecemeal 72T

You didn't read it on this website, or in this forum. Here is (bold and color added) ...Rev. Rul. Section 2.02(e) Changes to account balance. Under all three methods, substantially equal periodic payments are calculated with respect to an account balance as of the first valuation date selected in paragraph (d) above. Thus, a modification to the se - continued...

Piecemeal 72T

Hmm..That WAS the advice I was givenand also what I believe I just read on this site that you HAVE to include additional rollovers or you are limiting /manipulating the calculation. Very confused now.. - continued...

Piecemeal 72T

>>I recalculated and am getting SEPP payouts reflecting the combinedIf I am reading your post right, you have already busted your SEPP Once established, no additional funds may be added. You could have a second SEPP, or even a third. But when you added additional funds to the existing plan and recalculated, you busted the plan.At this point, my su - continued...

Piecemeal 72T

I originally retired at 55, leaving my retirement deferred and took my 401k. I began SEPP (from the 401K) the following year. THEN I had need of the retirement funds so I took those last year. I recalculated and am getting SEPP payouts reflecting the combined funds. I will be 59.5 in August, and from yet another source will be getting further reti - continued...

Over 55 72T flexibility

Start by contacting her former employer and find out if they allow periodic distributions directly from the 401(k) plan and whether the distributions can be requested as needed. She has flexibility as long as the funds are in the 401(k) plan and her fomer employer allows periodic distrbutions..She will have no flexibility if you roll the funds in - continued...

Over 55 72T flexibility

I am attempting to help my mother with her 72t distribution. She was unexpectedly laid off this week and will be 55 in May. She will be rolling her 401k and lump sum pension into an IRA. The amount of income will she will need to draw is completely unknown but will not need to be determined until November. Is there flexibility to change the pay - continued...