Equal Periodic Payment from an IRA


T

Tim Schramm

I am considering taking distributions from my IRA using one
of the three methods specified by the IRS - probably the
Annuitization method because it maximizes the current
distribution.

My biggest concern is the timing of the distribution if I
choose to take an annual amount from the plan. How much
leeway do I have in choosing the date to calculate and
distribute? Suppose I start this year and calculate an
annual amount of $20,000 (which I have to use in subsequent
years). Suppose I take the distribution from the IRA on
December 1, 2004. Do I have to take the distribution on that
date in 2005 and so forth? What if I choose a different
date, but still take out exactly $20,000 in 2005? What if I
take it out in two chunks instead of one distribution?

All of the material I have read so far is a little vague on
this particular issue. Can anyone shed light on this?

Thanks!!!
 
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M

Missy Doyle

I am considering taking distributions from my IRA using one
of the three methods specified by the IRS - probably the
Annuitization method because it maximizes the current
distribution.

My biggest concern is the timing of the distribution if I
choose to take an annual amount from the plan. How much
leeway do I have in choosing the date to calculate and
distribute? Suppose I start this year and calculate an
annual amount of $20,000 (which I have to use in subsequent
years). Suppose I take the distribution from the IRA on
December 1, 2004. Do I have to take the distribution on that
date in 2005 and so forth? What if I choose a different
date, but still take out exactly $20,000 in 2005? What if I
take it out in two chunks instead of one distribution?

All of the material I have read so far is a little vague on
this particular issue. Can anyone shed light on this?
How old are you?? You *must* start withdrawing from your
IRA by April 1st of the year after you are 70 1/2. You must
withdraw the amount that your broker or banker says that you
must withdraw. It is based on your age and amount of the
account on Dec. 31st of the last year. The penalty for not
withdrawing this amount is 50% of the amount that you should
have withdrawn. Other than that, I cannot think of any
amount that you *have* to withdraw (it is late in the day).

Missy Doyle
 
J

John H. Fisher

I am considering taking distributions from my IRA using one
of the three methods specified by the IRS - probably the
Annuitization method because it maximizes the current
distribution.

My biggest concern is the timing of the distribution if I
choose to take an annual amount from the plan. How much
leeway do I have in choosing the date to calculate and
distribute? Suppose I start this year and calculate an
annual amount of $20,000 (which I have to use in subsequent
years). Suppose I take the distribution from the IRA on
December 1, 2004. Do I have to take the distribution on that
date in 2005 and so forth? What if I choose a different
date, but still take out exactly $20,000 in 2005? What if I
take it out in two chunks instead of one distribution?

All of the material I have read so far is a little vague on
this particular issue. Can anyone shed light on this?
Do as you like!!! Take $20K on 12/31/04 and another $20K on
01/01/05. You will then report the distributions only for
the year in which they were taken. You may take 10K on
01/01/05 and another 10K on 07/01/05 and your total
distribution for the year 2005 would be 20K. Split it up as
you like, the income is taxed in the year in which it is
taken.

If you set up annual distribution dates, with the holder of
your IRA's, you'll be held to those dates unless you make
changes. Here are the FAQ's related to this topic (as they
relate to annuitization):

http://www.irs.gov/retirement/article/0,,id=103045,00.html#4

"Jack" - John H. Fisher - (e-mail address removed)
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=:)
 
B

Bill

(e-mail address removed) (Tim=A0Schramm) posted:
I am considering taking distributions from my
IRA using one of the three methods specified
by the IRS - probably the Annuitization
method because it maximizes the current
distribution.
My biggest concern is the timing of the
distribution if I choose to take an annual
amount from the plan. How much leeway do I
have in choosing the date to calculate and
distribute? Suppose I start this year and
calculate an annual amount of $20,000 (which
I have to use in subsequent years). Suppose I
take the distribution from the IRA on
December 1, 2004. Do I have to take the
distribution on that date in 2005 and so forth?
What if I choose a different date, but still take
out exactly $20,000 in 2005? What if I take it
out in two chunks instead of one distribution?
All of the material I have read so far is a little
vague on this particular issue. Can anyone
shed light on this?
Though you don't specify, I assume you are talking about the
Required Minimum Distribution - which begins in the year
when you reach age 70 1/2. There are different tables for
computing the amount of the RMD (See Pub 590), but the only
requirement is that you withdraw the proper amount during
each year.

You can withdraw it in one lump sum on January 2 (since 1/1
is a legal holiday), or on December 31, or you can take
equal monthly distributions throughout the year. So long as
you meet the RMD total amount, you will have no problem.

Bill
 
P

Phoebe Roberts, EA

Missy said:
nother than that, I cannot think of any
amount that you *have* to withdraw (it is late in the day).
I think he's talking about substantially equal periodic
payments under 72T, which means he's younger than 59.

For the OP, AFAIK, you can take the money out in whatever
increments and at whatever times you want, as long as you
take your "substantially equal" amount each calendar year.

Phoebe :)
 
H

Herb Smith

(e-mail address removed) (Tim Schramm) wrote:
How old are you?? You *must* start withdrawing from your
IRA by April 1st of the year after you are 70 1/2. You must
withdraw the amount that your broker or banker says that you
must withdraw. It is based on your age and amount of the
account on Dec. 31st of the last year. The penalty for not
withdrawing this amount is 50% of the amount that you should
have withdrawn. Other than that, I cannot think of any
amount that you *have* to withdraw (it is late in the day).
I think you missed the point of the original question,
Missy. The OP is talking about Subtantially Equal Periodic
Payments (72t), to allow him/her to tap his IRA without
penalty. NOT the RMD withdrawals required after age 70-1/2.
 
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D

David Woods, EA, ChFC, CLU

Bill said:
(e-mail address removed) (Tim=A0Schramm) posted:
Though you don't specify, I assume you are talking about the
Required Minimum Distribution - which begins in the year
when you reach age 70 1/2. There are different tables for
computing the amount of the RMD (See Pub 590), but the only
requirement is that you withdraw the proper amount during
each year.
It wasn't what he was referring to. He was referring to
lifetime payments prior to age 59 1/2.
 

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