I’ve searched for an answer to this but cannot find it. In short, do annual 72t withdrawals have to be spaced 365 days apart (as the name periodic might imply), or can they happen on any day within the fiscal year?
In my case, I’d like to start my plan now, in Dec 2017, with a first withdrawal. Then, I’d like to take the 2018 withdrawal in January 2018. Is this allowed?
It seems like it is, but I’d like to be sure.
Thank’s a bundle for your help!
Chris
Summarized another way: If taking full annual payments (one per “year”), the 2017 amount is not pro-rated to reflect the number of 2017 days in the plan. So any annual plan that starts in mid year can and must disburse the annual amount (12 months’ worth). This seems to imply that such a plan is required to make at least 6 annual distributions (not 5), since its run will continue into the 6th fiscal year (assuming I’ve already reached 59.5 along the way). Yes?
Ok, after more digging, I found the confirmation I was after here: https://www.bogleheads.org/forum/viewtopic.php?t=114348It’s the best description of the “stub years” issue (initial year and final year) I’ve seen.Still wondering if I can use the output of the calculator as sufficient documentation, or whether I need to show a long hand calculation done myself. Cheers!
Best to make a copy of the output of the calculator you used. There are small differences between calculators based on your distribution pattern (monthly, semi annual, full annual etc), but the IRS does not seem to mind those small differences as long as you are consistent. But it is risky to try to rush out a year end distribution now since it may not get distributed, and with no 1099R for the correct amount, you will have to start your plan in January, plus you don’t get the extra annual distribution either. Another risk is that your calculation is wrong for 2017 and there is no time to correct the distribution by taking out more if you are short, although you could probably reduce the interest rate in your calcs if the difference was small.
Permalink Submitted by Alan - IRA critic on Tue, 2017-12-19 16:08
The distributions can be taken in any pattern and number. The only thing that matters is that the 1099R report the exact amount of the annual SEPP calculation with respect to distributions taken within the term of the plan. So your plan is allowed although it is not clear whether you intend your distribution this month to equal the full annual or 1/12 of the annual. You have that option. Also, note that taking the full annual in January will put more budget pressure on you as the year winds down. Finally, be sure your initial calculation is correct and you have little time since you need to request the 2017 distribution very soon in order to avoid the risk that it does not get distributed due to holiday staffing and service backlogs.
Permalink Submitted by Chris Dobbs on Thu, 2017-12-28 19:48
Sorry for the delay. OK, so I can take a first full annual distribution now (starting the plan now) before the end of the month, and that will count as a full year’s distribution for 2017, even though there will only be a few days from 2017 in the timeframe of the plan. Then I can take another full annual distribution in January, which will count for 2018. In the end, I can get two year’s worth of distribution within a few days. Yes? If so, that’s great for me. My last question is, can I just trust the number from the 72t.net calculator? Is a copy of the output of that calculator sufficient as documentation on how I arrived at the number?Happy Holidays, and thanks againp.s. I can do the distribution instantly, so still have time. And budget pressure is not an issue for me.