72t on the Net

Calculating fixed amortization method

Bill, With these rock bottom interest rates, you should use the highest account balance you can as long as it does not overly represent the actual balance on the day you start your plan. Since 1/31 balance should be higher than 12/31, use that. If the market continues upward in February, and you start your plan in March, use the 2/29 value. In f - continued...

Calculating fixed amortization method

Excellent! Thanks for your help. - continued...

Calculating fixed amortization method

Sorry, my confusion. You started your IRA in November, not your SEPP plan. You don't need the qx and lx factors - merely go to IRS Publication 590 and look in the table for your life expectancy as of 12/31/2012. Use Excell as per previous post and a starting balance that you can document that represents the actual value of your account. The int - continued...

Calculating fixed amortization method

Sorry to confuse you. Its really not a big deal - I haven't started my Sepp yet - I am only asking if it is ok to use the current balance in my ira as the account balance. I am really more concerned about my first question because it says everywhere to verify the calculation yourself. It must be a mathematical equation. - continued...

Calculating fixed amortization method

I'm confused. If your plan started last year in November, you would have used $500,000. What was the date of the first distribution? Did you define annual recalculation when you defined your plan? If yes, what were the specifications of the plan you defined? - continued...

Calculating fixed amortization method

I was just asking about the account balance in my IRA. For instance if when I opened the account it had $500,000 in it and today it has $550,000 can I use the current balance as my starting point. - continued...

Calculating fixed amortization method

>>How do I use these numbers to calculate my distribution? If you are asking, then you may be better off hiring an actuary to do your calculations. You could also merely use Excel (or similar) and the PV of an annuity with the payment due at the end of the year. >>can I use its current balance or should I use December 31st of 2011? If your - continued...

Calculating fixed amortization method

I am 50 yrs old and I will be starting a new plan in March or April. I would like to know how to calculate the fixed amortization method for single life expectancy without using the calculators. The calculator asks for - account balance, interest rate, age At age 50 the IRS Mortality table has two numbers qx = 0.002409 lx = 966677 How do I us - continued...

72t.Net Refresh

It looks good in Firefox and AOL too - continued...

Going back to work after taking 72T payments

I do not suggest to anyone to make "non-deductible" IRA contributions for anyone who already has a "significant" IRA total. They will only be able to recover that "basis" tax-free over a long extended lifetime of distributions based upon the 8606 form calculations each year. If they have a 401-k/403-b, and no IRA, then the "non-deductible IRA" w - continued...

72t

Yes, you can. Working has no affect on your 72t plan. Most 72t plans are started due to loss of job or early retirement, but a 72t can also be used to supplement your income. What you want to avoid is the unnecessary early drawdown of your retirement plan assets, and the higher taxes resulting from adding the distributions to the work income. If - continued...

Going back to work after taking 72T payments

It is a very good idea worth considering. Actually, at his age he can contribute up to 6,000, but if he is participating in a retirement plan at work his MAGI may be too high to take the deduction. If he cannot take the deduction, he could still contribute and report the contribution as non deductible on Form 8606. While this contribution MUST be - continued...

Going back to work after taking 72T payments

Thanks DLZ. He could also put whatever he wanted (up to $5k annual limit if memory serves me correctly for his age) into that IRA, to adjust the amount of money coming out of 72T that he may not need that year, and not do it at all if he needed the 72T money while still working, so it gives a lot of flexibility. KEN - continued...

72t

Can I still work full or part time at a different company after I begin my 72t distributions? - continued...

Going back to work after taking 72T payments

Very innovative approach. And that way his SEPP wouldn't be extended longer until 61 or later if he re-started it in a couple of years. - continued...

Going back to work after taking 72T payments

Question for Alan, DLZ, et al-- IF Lodi Bob kept taking same distribution because he may start working again for a few years, he would be better able to retire again prior to 59 1/2, since his 72T was still that original $$ withdrawal amount, as opposed to cutting his distribution by switching to RMD, and then wishing he hadn't reduced it-- (the - continued...

Going back to work after taking 72T payments

You would take $ 8,772/year = $ 17,544 in distributions to be taxed on top of your salary over 2 years. That would be at least $ 1,754 in extra taxes in the 25% tax rate vs in the 15% tax rate if you weren't working. As I said, stop the SEPP 72T now. YOU CAN ALWAYS START ONE AGAIN IN A FEW YEARS IF YOU STOP WORKING, EVEN THOUGH YOU WOULD HAVE TO B - continued...

Going back to work after taking 72T payments

Can I continue the plan if I only go back to work for two more years? I am a little confused. What would happen if I return to work now, and then retire again in two more years? - continued...

Going back to work after taking 72T payments

You have 3 choices here, and it may not be easy to decide which is better: 1) Bust the plan and stop distributions - you are only about 1/6 of the way through your plan and paying the penalty on $11,696 plus the fairly low interest rate and period rate is applied to will free you of the plan and preserve your IRA balance and tax deferral. If you - continued...

Going back to work after taking 72T payments

You have withdrawn $ 11,696. Penalty would be $ 1,170, plus interest at maybe 5%, which is no big deal in the total picture that you are going back to work. You probably paid income taxes at a relatively lower rate for 2011 than you were in 2010 or will be in 2012, probably at least 10% less at 15% rather than 25%. Keep the money and pay the tax - continued...

Going back to work after taking 72T payments

I am 53 years old, and have been retired for 16 months. I am considering going back to my old job full time, but have taken 72T monthly withdrawals of $731 for the last 16 months. If I do this, do I pay the 10% penalty on all my withdrawals, plus interest? If so, what would the interest rate be calculated at? Would my 72T be then stopped, until I - continued...

72t

Since you are retiring in the year you reach 55 or later, you may not need a 72t plan. If the plan of your current employer will provide you with reasonably flexible withdrawal options you can take distributions directly from the plan penalty free under the special exception. Then when you reach 59.5 you could roll over the plan to an IRA. Howev - continued...

72t

I am looking to retire at 55 in May. My 72t distribution was figured at $24,900 annually. Are federal and state taxes withheld from this amount? I live in Indiana. - continued...

3 years into a 72T SEPP plan, considering changing to min dist.

Also, your plan will end on the same date it originally would have ended. The one time switch to RMD does not affect the plan modification date or the distribution options in the final calendar year. Note that you can also change your calculation method from individual to joint or vice versa when you make the switch. Usually, individual is used fo - continued...

72t.Net Refresh

Yes, I know 8 is the last stop for XP users in the IE series. I had expected to get a new computer with Win 7 on it well before this, so now the XP days are obviously numbered as well. - continued...