Pension + SEPP

[emel1]

I turn 55 next month and am planning to retire.  I will start receiving my monthly pension Sept 1 and at the same time start to take SEPP distributions from my 401k.  Both will provide payments on a monthly basis.  Will I receive separate 1099-R forms for the pension and the SEPP distributions or will the total amounts received in the year be combined onto one 1099-R?  If they are combined onto one, how will IRS know that I am taking "substantially equal periodic payments" over the next 5 years?

[KarenL4 · Accepted solution]

Hi, emel1,

Thanks for reaching out and congratulations on your pending retirement.  You should receive a 1099-R for the substantially equal periodic payment (SEPP) from the 401K and a separate 1099 for the pension.

Please cheer by clicking the thumb icon in a post, and if this answers your question, select “Mark as best answer.”

Best,

Karen

[dmertz]

If the 401(k) plan from which you will be taking distributions is with the employer from which you will be separating from service in 2023 and you take distributions from your 401(k) only after reaching age 55 and separating from service, there is no need to do a SEPP plan because the age-55 penalty exception will apply.

[emel1]

Thanks for the response.  My understanding is that I don't qualify for that exception because I separated from my employer last year when I was 54.  I turn 55 next month.

[dmertz]

Correct, you do not qualify for that exception.  I mistakenly inferred that "planning to retire" meant that you would be separating from service later this year.