72t

L1: 72tI have just recently retired. I am 53 years old. I will be receiving a $350,000 lump sum some time near the end of August. I will also be receiving another $200,000 lump sum somewhere between 4-6 weeks from now. My question has to do with locking in the August rate of 3.27 with my entire amount ($550,000). Is it possible? And if so, then how? Or will I be forced to use the 3.27 rate on the first lump sum received in August and the lessor 2.83 (July) rate for the second lump sum received in September?2010-08-04 00:11, By: CK, IP: [66.188.38.242]
L2: 72tCK,
You may not even be able to use the better June rate for 1st distribution if you can’t get the IRA funded and then get first payment issued to you by 8/31. Your are correct that you will miss the opportunity to use that rate for the combined total once you get to 9/1/2010 and have not received a 1st payment from an IRA or IRA(s) thatholds that combined total. If the 2nd amount is not available to put in an IRA until after August, you would have to use a newer rate to start a second 72t, but make sure you put those funds in a separately numbered IRA account (if at same custodian) that is not intermingled with the first one. KEN2010-08-04 00:19, By: Ken, IP: [71.192.120.143]

L3: 72tKen,
Thanks for the reply. I was hoping there was a way to use the higher August rate for the entire amount. It sounds like I won’t be able to do that though. Can I waitaround in hopes that the rate will change higher in Oct, Nov, or Dec and then start my 72t then? I do not need the money immediately, so I could hold off on it if I was allowed to. Is that an option? Or do I have to begin the 72t immediately? And what are the chances that the rates will go up in the next few months?

2010-08-04 14:35, By: CK, IP: [66.188.38.242]

L4: 72tIf you don’t need the money immediately, why not wait until 2011 to start so that the 2010 distributions are not taxed on top of your other income ? Maybe your bracket in 2011 will be lower, even if tax rates are higher, but you might not be subject to the higher rates. At worst, the lateter in the year, the less that will be taxable for 2010, unless you take the full year distribution. No one can predict the interest rates for next month, let alone the rest of the year. You have some time until you will be 54 1/2, which is your “break even time” between 5 years and 59 1/2 for the term of your SEPP 72-T.2010-08-04 20:15, By: dlzallestaxes, IP: [72.78.110.86]

L5: 72tJust want to clarify that in your stated scenario here, you would be dealing with two totally separate rollover IRA accounts with a separate and independent 72t plan using each IRA account. No amounts could ever be transferred between these accounts once either 72t plan has begun.
Separate plans hedge your bets. There is twice the utory detail and therefore twice the change of making an error. On the plus side, if you bust one plan, the other remains unaffected.
If each plan is started in a month other than January, in the first calendar year you will have the choice of taking out a full annual distribution or a pro rated distribution by the month. Since the plans are totally separate, you could make a different first year decision for each plan.

2010-08-05 00:20, By: Alan S., IP: [24.116.165.60]