What happends if I take a distribution now?

L1: What happends if I take a distribution now?I began my retirement at age 54 in June 2004. I rolled my pension into a traditional IRA at that time. I was told then that the 72t rule would last for 5 years or age 59 1/2 whichever was longer.My age isnow 57 1/2 andI would like to take a monthly distribution for the first time. My question is, if I start taking the distribution now will that change the 72t rule to age 62 1/2 or will the 72t rule still stop at age 59 1/2 ?2007-10-24 12:32, By: Tee, IP: [4.154.40.187]
L2: What happends if I take a distribution now?If you set up a SEPP plan at age 57.5, you will have to go the five years. Start by using the ”Last Payment Date” calculator from the menu above and it will give you the ending date. your SEPP age would either be 57 or 58 – it is your attained age in teh year the first distribution occurs.
Now start thinking about other possible sources of funds or weight the possibility of taking a distribution and paying the 10% penalty.
2007-10-24 12:51, By: Gfw, IP: [24.148.16.150]

L2: What happends if I take a distribution now?CLARIFICATION — If you can somehow figure out an alternative way to get to 59 1/2, then you will be able to take -0- to 100% of your IRA balance in any year until 70 1/2. If you start at 57 1/2, you cannot change your ANNUALdistribution amount for 5 years, i.e. until 62 1/2. If you need any additional funds during the next 5 years, especially 3-5 years into the SEPP 72-T plan, you will “bust” the plan, and be subject to a RETROACTIVE 10% PENALTY on all distributions taken cumulatively from 57 1/2 until that disqualifying event.Home equity loans, refinancing, even credit cards, may be better alternatives for 2 years, and then take any distribution to pay them off.2007-10-24 17:31, By: dlzallestaxes, IP: [4.175.9.167]

L2: What happends if I take a distribution now?The previous post is not entirely correct.
When a disqualifying event occurs; e.g. causing a “bust” or modification of the distribution plan, the 10% surtax plus interest applies to all distributions made from inception of the plan. The exception is whenever, the plan period spans the taxpayer”s 59 1/2 birthday. In that case, the 10% surtax plus interest only applies to actual distributions taken before the taxpayer”s 59 1/2 birthday.
This poses little comfort to the taxpayer; however, it can be potentially worthwhile for a 57, 58 year-old to intentionally start a plan and “bust” it @ age 59 1/2 plus 1 day much in the same theoretical sense that it is generally to one”s benefit to accelerate tax deductions and defer income recognition relative to each tax year.
TheBadger
wjstecker@wispertel.net
2007-10-26 07:46, By: TheBadger, IP: [72.42.67.124]