SEPP annual distribution date
Once you elect an SEPP annual distribution under the 72t fixed amortization method, does the annual distribution have to occur on the same exact date each year or can you vary the date you actually take the distribution from year to year without it being a modification? Example: Year 1 $2000 distribution occurs on July 15th. Year 2 $2000 distribution on January 15th. Year 3 $2000 distribution on March 15th, etc. Is this OK or would this be a modification of the program?
Permalink Submitted by Alan Spross on Wed, 2010-07-14 20:43
No problem at all with changing the distribution pattern. The critical requirement is that the exact annual amount must be withdrawn in the calendar year. The distribution pattern can be changed from year to year. If periodic withdrawals are set up with the custodian, it works best if a date early in the month is used. That will allow time in December to check the annual total and make a corrective distribution if the amount is short or even a 60 day rollover if too much has been distributed.
For the first year, there is a choice of withdrawing the full annual amount OR a pro rated amount by the month the plan begins, eg if first distribution is in Sept, by the end of the year either 33.33% of the annual figure can be taken out OR the full annual figure.
Permalink Submitted by Jeanine Mioton on Wed, 2010-07-14 21:07
Thank you for your response.