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    gemcneill's Avatar
    gemcneill Posts: 2, Reputation: 1
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    #1

    Mar 18, 2006, 12:26 PM
    Stop substantially equal payments
    I have been making substantially equal payments (withdrawals) from a 403B for 4-5 years and am considering stopping the withdrawals. I am 43 years old. Can I do this without any negative tax consequences?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Mar 18, 2006, 10:08 PM
    How much has been withdrawn, what is the balance, why did you start and why do you want to stop?
    gemcneill's Avatar
    gemcneill Posts: 2, Reputation: 1
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    #3

    Mar 31, 2006, 09:35 AM
    I started 9/99 with a balance of about $30K and have been making quarterly withdrawals of about $630 (minus 20% held for Fed tax) since. This was based on a 45 year payout at roughly 8%. There is about $20K left. This was done to offset the cost of a life insurance policy, which has since been canceled. I would like to discontinue these withdrawals (w/o penalty) and roll the $ into a IRA. Will there be a penalty for this, and if so how much?

    I have not been paying penalties against these withdrawals on my yearly income tax as substantially equal payments are an exception.

    Thanks for your help!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Apr 1, 2006, 09:59 AM
    Just contact the custodian to stop the withdrawals, then roll the money over to a rollover IRA using the custodian-to-custodian option. There is nothing else to be done other than what is noted below.

    The IRS will be notified using Form 5498, but, given the amounts in question, they will probably take no notice. Be sure to report the rollover on your 2006 tax`return.
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