72t distributions

L1: 72t distributionsWhy do 72t distributions increase?
2007-07-20 08:07, By: Chad, IP: [74.93.44.213]

L2: 72t distributionsI am not sure I understand your question, but once you start a 72t, the annual amount distributed normally does not change. If there is a later change that does NOT bust the plan, it would be caused by;
1) You adopted a recalculation method when you started the plan under which the variables are recalculated each year. The distribution could go up or down, but if the account balance rises more than the amount you distributed, and the interest rate does not fall, your being a year older would change your life expectancy to increase the amount of distribution.
2) You elected the one time switch to the RMD method. This almost always substantially reduces the annual distribution, but in rare cases where your account has had a massive investment gain, it could conceivably increase the distribution also.
3) You have other IRA or retirement accounts that were not part of your original 72t plan, and you use those other account(s) to start a second and independent 72t plan. This would be typical for someone who starts their 72t in their 40s or early 50s and the cost of living makes the original calculation insufficient. Of course, you must have the other accounts to do this.

2007-07-20 10:57, By: Alan S., IP: [24.116.66.98]

L2: 72t distributionsAlan forgot one other possibility — If you take less than a full year”s distribution in the first year, pro rated on a monthly basis, then the annual distributions in all future years, except possibily the final year, will be higher than the first calendar year.2007-07-20 13:13, By: dlzallestaxes, IP: [141.151.90.43]