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Hello forum! Id like to start a 72(t) plan and just want to make sure I do it the correct way.
Date of Birth:09/01/1963
Age:57
Single
Annual cash needed year 1 (after taxes):55K
Annual cash needed later years (after taxes):55K
72t Method: Amortization
72t Distribution Start Date:01/06/2021
Life table: Single 27.9
Stub Year*:No
Annual Recalc*:No
AFR* Rate:0.58 12/2020
Balance(s)*:$1,935,436.38 in this IRA. I have another IRA with $310k which I'll use for emergencies. I also have other liquid assets of about $100k.
I have used the SEPP tool for an amortized value of $75,335.08/yr. Dividing that by 12 I get 6277.92/Mo. I'm going to start on 01/06/2021, and just have a few questions to make sure I'm not missing anything. I am using my 11/2020 IRA statement to determine the account value..is that ok? Aside from never adding or removing anything except this payment each month, and filing an IRS form 5329 each year, is there anything else I need to file/document/consider? Thank you for any help!
One more piece of information...I took the maximum CARES act withdrawal of $100k earlier this year. Will that effect starting a 72(t) in 2021? Thanks!
No, but it is taxable, unless you repay it before 12/31/2020. But no 10% early distribution penalty, as long as you were "affected" by the pandemic, which doesn't mean that you had to have been "infected" with COVID-19. Also, you can repay the $ 100,000 over 2020, 2021, and/or 2022, and file amended returns to get a refund on the taxes paid. Or you can report the income equally for 2020, 2021, and 2022.
Thank you! That is what I had hoped. I submitted the paperwork to start regular distributions today! Very happy to get this moving. I will report the CARES income over 3 years. Thanks again for your help!:)
