72(t) & 72(q) SEPP Calculator

Owner's Age: Enter the attained age of the account owner on December 31st of the year that distributions will begin.

Beneficiary's Age: Enter your attained age of the account beneficiary in the year that distributions will begin.

Method to Illustrate: Select from one of the three acceptable methods.

Total IRA Account Balance: Enter the total balance all of your IRA account(s). Used only for illustrative purposes.

Amount Allocated to SEPP: Enter the amount in the IRA account(s) that will be usen in the SEPP plan. When you decide what IRA account to allocate to the SEPP plan, then all the funds in those accounts must be used to determine the annual distribution from the SEPP.

Reasonable Interest Rate: Enter an interest rate that will be reasonable when the first payment is made for methods number two and three.

Post 12/31/2002 - For any SEPP plan the interest rate that may be used is any interest rate that is not more than 120 percent of the federal mid-term rate for either of the two months immediately preceding the month in which the distribution begins.

IRS Penalty Interest Rate: The interest rate charged by the IRS on past due income taxes and tax penalties. Used only for illustrative purposes.

Use Joint Calculations: Enter either YES or NO to use joint life expectancy calclations. To use the Uniform Table merely set the beneficiary's age to the Owner's age minus 10. Joint calculations are seldom useful as they will always generate a lower annual distribution.

COST to BUST: The Cost to Bust is equal to the the penalty due for the current year, all previous plan years, plus interest due. 

For example, Based on a payment of $9,001.71 and an IRS Interest Rate  of 9%, Year 2 would be calculated as follows:

Year1=(9001.71*.10)+(900.17*0.09)= 900.17+81.02
Year 2=(9001.71*.10)              = 900.17
Total Tax & Penalty Due:          =1881.36

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Planning Pointer: If the single life calculations produce a higher than desired payment, consider breaking the single account 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.

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