72t

L1: 72tI just heard about the 72t. I would like to retire at age 55 (July 2007 ) I will have $700,000.00 in savings at that time.Some in IRA other money is stocks etc.Does the 72t apply to me? I am healthy and do not have to retiere but would like to.2005-09-30 23:24, By: Maggie, IP: [152.163.100.202]
L2: 72t”A little knowledge is a dangerous thing.” I believe that people should consider a SEPP 72-T plan only if they have little or know investments outside of their retirement plans. Then, and only then, might someone consider this approach. However, it is fraught with potential traps. This website has 1,500 postings, and I would guess that at least half of them concern people who are faced with the 10% penalty on the cumulative withdrawals when they “bust” the plan for some reason. If you can “survive” until you are 59 1/2 on non-retirement assets, remortgaging, home equity loans, etc., you will be far better off. If you have a 401-K, you are eligible to take withdrawals at age 55 provided you have “separated from service”. If you are still working for a company, you can take a loan up to $ 50,000 (but not more than 1/2 of your account). But you have to repay it within 5 years, or when you leave the company, so don’t rush to do this either.
You can use the non-retirement investments, loans, etc. to get you to 59 1/2. Then there is no limit to how much you can withdraw from -0- to 100% until you are 70 1/2. Then you must take the “REQUIRED MINIMUM DISTRIBUTION” each year thereafter. Between 59 1/2 and 70 1/2 you should consider developing a plan to withdraw amounts that will be up to the limit of the 15% income tax bracket, but if posible,not over that limit. Also, watch the taxability of social security benefits starting at age 62 (if you aren’t workingup to age 66).
GET PROFESSIONAL GUIDANCE FROM AN ACCOUNTANT OR FINANCIAL PLANNER, BUT BE CAREFUL OF MIS-GUIDANCE FROM THE LATTER BECAUSE THEY ARE MOTIVATED BY GENERATING COMMISSIONS AND INCOME, UNLESS THEY ARE “FEE BASED”.2005-09-30 23:49, By: dlztaxes, IP: [4.175.9.63]

L2: 72tIf you have funds in an IRA, they you may want to consider 72t [Substantially Equal Periodic Payment (SEPP)] Plan. Once established, the plan must continue unchanged until the later of age 59.5, or 5 years (about 1827 days) following the date of the first payment.
A SEPP need not be complicated – it really depends on the design. Start by learning what a SEPP is and what it’s requirements are. The FAQ on the site is a good starting point and Bill’s book (button on main site) will give you all the information that you need.
Once you feel you have a good working knowledge of SEPP plans, contact your legal and/or tax-advisor for their input. If you do adot a SEPP, make sure that you keep good documentation on everything from the initial design to the yearly transactions.
Good luck
2005-10-01 10:03, By: Gfw, IP: [172.16.1.70]