72(t)

L1: 72(t)I was laid off in June 2009 andI will be 58 this month. It was explained to me that I could take from my IRA early if it is spread out over a 5 year period it’s called 72(t).If so what do need to do, is their a form that need to sent to the IRS and how canI get it.Thank you,Jackson2010-01-07 17:53, By: Jackson, IP: [174.26.151.207]
L2: 72(t)You do not have to file your plan with the IRS unless they ask for it. But if you start a plan you should thoroughly document your calculations. These plans can be quite complex for a novice, so you should research this site carefully, starting with the 72t SEPP plans tab. Then feel free to post any questions.That said, if there is any way for you to raise living costs from another source for 18 months, you will reach the penalty free age and avoid having to take these distributions for 5 years. But if not, at least you should be aware that if you bust your plan, ONLY the distributions you took prior to 59.5 will be subject to penalty. In other words, if you make an error at age 61, that error would bust your plan, but the distributions you took AFTER 59.5 would not be penalized, only those taken prior.Also, note that there are certain penalty exceptions that avoid the penalty OTHER than a 72t plan. For example, if you collect UC for at least 12 consecutive weeks, then distributions to pay for your medical insurance escape penalty. There is also one for other medical expenses as well. This might allow you to avoid the penalty on a portion of your distributions, enough to avoid a formal 72t plan.And if you have a 401k from the former employer, distributions that you can take directly from that plan also escape penalty due to the age 55 separation exception. This exception does NOT apply to IRA balances.2010-01-07 18:36, By: Alan S., IP: [24.116.165.60]