RDL: SEPP Minimum Distribution Method Re-calculations

[Kathleen Reynolds]

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SEPP minimum distribution recalculations and switch to minimum distribution calculations Individuals who have elected the minimum distribution method must recalculate their distribution amount annually based on the previous year end value. Individuals who initially elected the amortization or annuitization method may make a one time irrevocable switch to the minimum distribution method for the remainder of their SEPP. Pre-59½ distributions have to continue until the owner/IRA holder reaches age 59½, with the additional requirement that the distributions must be taken for at least 5 years. Switching to the minimum distribution method does not change the time frame that an individual is required to take distributions.

 

Plan Profile

• Calculation type Indicate if this an annual recalculation of an existing minimum distribution method SEPP or if it is a switch from a different method to the minimum distribution method. If a switch calculation was made in a prior year, select recalculation.
• Original start date Enter the date the individual first began to take SEPP distributions (mm/yyyy).
• Date of switch Enter the date the IRA owner is switching to the minimum distribution method. (mm/yyyy). This will only appear for a switch to minimum distribution calculation.
• Dec. 31 balance/Plan balance For recalculations under the minimum distribution method, use the previous year end value. For switch minimum distribution calculations, you can use any value from the previous year end up through the end of the last period a payment was taken under the original method.
• Expected plan growth The growth rate you’d like to use to estimate how the plan will grow in future years and what future distributions may be. This is for illustration purposes only. The calculation has to be made each year based on the actual previous year end value.
• Distribution frequency Select the distribution frequency that was originally chosen.
• Life expectancy Select the life expectancy that was originally chosen.
• IRA owner’s date of birth This impacts both the amount of the distributions and the amount of time the distributions have to be taken. Younger IRA owners will have smaller distribution amounts because of their longer life expectancies and the distributions will have to be taken for a longer period of time (5 years or age 59½, whichever is longer).
• Beneficiary’s date of birth Enter the beneficiary’s date of birth if joint life expectancy was elected.

General Screen Functions

Notice 2022-6

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