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59 1/2 can I take more out?  


Rob99
Posts: 4
(@rob99)
Eminent Member
Joined: 7 months ago

I am currently in the 3rd year of RMD's I will turn 59 1/2 during the 5 year term of the 72T, once I turn 59 1/2 ( no early penalty)can I withdrawal additional funds without causing any issues to what I signed up for?

Or am I frozen out till the 72T runs it's course?

Thanks, Rob.

7 Replies
Tracy
Posts: 13
Admin
(@tracy)
Estimable Member
Joined: 1 year ago

Hi Rob,

You can use the First Modification Date calculator in the menu above to calculate the date after which you can make changes to the amount you withdraw. Hope that helps!

Tracy

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dlzallestaxes@msn.com
Posts: 50
(@dlzallestaxesmsn-com)
Illustrious Member
Joined: 1 year ago

When you started your SEPP 72-T plan, it was required that the PLAN would not terminate until the later of age 59 1/2 or 5 years. Since you were older than 54 1/2 when you started, then you must wait until after the 5 year (60 months), at which time the plan will automatically end, and THEN you can take any amount, or -0-.

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Rob99
Posts: 4
(@rob99)
Eminent Member
Joined: 7 months ago

Thank you for the reply's, i'll not withdraw any additional other than the auto calculated distribution scheduled every April. 

On another note, the IRS allows a onetime lifetime tax free/penalty free withdrawal from IRA up to $4500 to fund a high deductible

(which i have) HSA account, i would like to take advantage of that to help pay for medical expenses, so i'm wondering if that would be an allowable transfer without upsetting the 72 rules?

Again thanks for the info, Rob.

 

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Rob99
Posts: 4
(@rob99)
Eminent Member
Joined: 7 months ago

I have a high ded health insurance plan which allows me to have a self funded HSA.

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dlzallestaxes@msn.com
Posts: 50
(@dlzallestaxesmsn-com)
Illustrious Member
Joined: 1 year ago

The problem here is that you can only exclude the amount of the total of your Medical Premiums and other Medical Expenses which EXCEED 10% of your AGI (Adjusted Gross Income) which WOULD HAVE BEEN DEDUCTIBLE if you itemized, but it is allowed even if you took the Standard Deduction.

 

USING THE MEDICAL EXPENSE EXCEPTION TO THE 10% EARLY DISTRIBUTION PENALTY

By Jeremy T. Rodriguez, JD
IRA Analyst
Follow Us on Twitter: @theslottreport

Generally, taking distributions from an IRA or qualified plan before retirement age should be a last resort. Of course, life has its unexpected pitfalls and at times, earlier access to these funds is necessary. One of the ways the Tax Code tries to help taxpayers in difficult financial situations is through exceptions to the 10% early distribution penalty.

One of those exceptions is for qualified medical expenses that exceed a 10% of adjusted gross income (this threshold was increased under the Tax Cuts and Jobs Act). The expenses can be for yourself, a spouse, or even your dependents. Besides the income threshold, there are two other important qualification rules. First, the medical expenses must be otherwise deductible under the Tax Code. The annual IRS guidance in Publication 502 helps tax payers determine whether an expense is deductible (See  https://www.irs.gov/publications/p502 ), Keep in mind that in additional to traditional medical costs (e.g., office visit co-payments, prescription costs, and medical equipment rental costs), the definition also includes insurance premiums, transportation costs to receive medical care, and qualified long-term care services.

Secondly, the expenses must be paid in the same year as the IRA or qualified plan distribution. All too often, people mistakenly think that expenses must be incurred in the year of distribution. Thankfully, that isn’t the case, which means a distribution from an IRA or qualified plan can be used to pay for an older medical bill that could be heading to collections, and still qualify for the 10% early distribution exemption.

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Rob99
Posts: 4
(@rob99)
Eminent Member
Joined: 7 months ago

ok thanks for that article, i will find out for sure if i can when i see my tax accountant in February.

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dlzallestaxes@msn.com
Posts: 50
(@dlzallestaxesmsn-com)
Illustrious Member
Joined: 1 year ago

FYI -- THE NEW "EXTENDER" TAX LAW HAS JUST REVISED YESTERDAY  THE MEDICAL EXPENSE THRESHOLD FOR 2019 & 2020 BACK TO THE 7.5% THAT WAS USED FOR 2017 & 2018.

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