SEPP 72T
Hello,
I was wondering if you could answer a few question regarding calculation on the IRA balance and the distribution being to the penny.
I am 54 with a 12/25/1965 birthday. Lets say day I select for the SEPP 72t balance is 1/15/2020 and the IRA balance is $401,225.27. Using a single amortized method at 2%, do I round to $401,225 for the calculated balance?
Also, many online SEPP 72t calculators round the distribution, I’ve read it has to be to the exact penny. Is there and accurate to the penny calculator you can recommend?
Thank You,
Bruce Capasso.
Permalink Submitted by Alan - IRA critic on Wed, 2020-01-01 21:10
There has been no indication that the IRS is concerned with rounding conventions. Remember, the “S” in SEPP stands for “substantially”. If set up monthly or other automatic distributions to be equal, you will have to round them to the nearest penny, so you will always be a few cents over or under your indicated annual amount. As for the initial balance, enter the exact balance that you can document with a statement copy or screen print, but if the calculator you use rounds to the nearest dollar, don’t worry about the cents. You will find that some calculators make different assumptions about how often during the year you plan to take distributions. If you run into one of those, just elect annual payment. You are free to take your distribution in whatever pattern you wish. The only thing that matters is what the 1099R adds up to for all distributions during the year.