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Restarting 72t  

Posts: 6
Trusted Member
Joined: 1 year ago


Does anyone know if this possible?

I start my 72t with a calculation based on my current account, age, midterm rate.  I being receiving payments.

A year later that account increases a substantial amount where I would like to start all over. Is this possible?

If it is, I'm assuming I would pay the 10% penalty on the first year?


I was at to my target amount a month ago and now my account has dropped about 15% lower. My thoughts would be to begin as planned with the lower amount based on that drop in account value.  And if there was a chance over the next year to year and a half my account gets back that amount, I wanted to redo it with the new amount. 




1 Reply
Posts: 87
Illustrious Member
Joined: 2 years ago

Yes, you can voluntarily terminate your plan at any time, and pay the 10% penalty on the cumulative amount of distributions taken. But your rationale is confusing to me the way that you worded it. In the first paragraph you said that the account balance has increased substantially, which seems unusual based upon the significant decreases this past week.  But, if so, then you can start over, and use the higher balance, and use the Jan or Feb interest rate if you restart in March.

However, in your second paragraph you state that your account balance is 15% lower, which seems consistent with the stock market correction recently. But, you can still continue at the original annual distribution. Without your providing all of the figures, it is difficult to suggest an appropriate approach, especially since you seem to have also concluded with the idea that you want to terminate any new plan in 12-18 months, and pay the 10% penalty again, and hopefully start anew on what you hope to be a higher balance.

The better approach might be to start by separating your IRA balance into two accounts, at possibly 75% and 25% of your balance. Use the higher account as your SEPP 72-T account, and keep the other account to use for a second SEPP 72-T once the market recovers. Depending upon your tax bracket and cash needs, you can take a full annual distribution now for 2020, and whenever you start the 2nd plan, either later in 2020, 2021, or 2022, you could do that for that calendar year. Remember, you need to provide for the payment of the income taxes either by having them withheld, or by submitting estimated payments.

I suggest that you fill out the template on this website at the beginning of your response, to help us understand your situation, and your cash needs.