5 year period

L1: 5 year periodI am 54 and will not turn 55 until 2006. If I begin a 72t distribution in December of 2005, when does the five year period end? Is it 60 calendar months? My fith distribution would occur in Dec. 2009. In January of 2010, can I modify the plan since I have taken the 5th distribution and I would now be in the 6th year but I would have not completed the 5th year.2005-09-19 08:12, By: sparse, IP: [68.219.29.22]
L2: 5 year periodThe periodends 5 years (about 1,826 days)following the date of the first payment.
Once the five year period has ended and you have atttained the age of 59.5, you can modify.
For more details, please refer to the “Last Payment Date” calculator which can be found at http://72t.net/ED_DisPeriod.aspx. 2005-09-19 08:21, By: Gfw, IP: [172.16.1.70]

L2: 5 year periodHello Sparse:
This very issue was litigated (the taxpayer lost) in Arnold v. Commissioer (111 TC 250; 1998).
Assuming you might take your 1st distribution on 12/1/05; the 5-year period ends 1827 days later on 12/1/10. Therefore, even though you will have taken your 5th distribution in 12/09; you may NOT modify your distribution pattern until 12/2/10 assuming you will have attained the age of 59 1/2 by 12/2/10.
TheBadger
wjstecker@wispertel.net
2005-09-19 08:26, By: TheBadger, IP: [66.250.23.21]

L2: 5 year periodThanks to both of you. You just saved my fanancial planner some research time.2005-09-19 12:27, By: sparse, IP: [68.219.31.161]

L2: 5 year periodThe sooner you start, the earlier the 5-year period ends in 2010 (Sept. rather than Dec.). Since you are already 54 1/2, you should plan to start it now, unless you will be in a lower tax bracket in 2006 thru 2010.
If you are in the 25% or higher tax bracket, you could take only 1/3 of the annual amount ( i.e. 4 months/12) in September for the 2005 distribution, or if you don’t need that much immediately, then take 4 monthly payments in 2005 starting in September. This way you start sooner, and end sooner.2005-09-19 12:37, By: dlztaxes, IP: [4.175.9.159]

L2: 5 year periodI will be in a substantially lower bracket for 2006. I think I will wait. Thanks for all of the help2005-09-19 12:58, By: sparse, IP: [68.219.31.35]

L2: 5 year periodIf you want to end the 5-year period in 2010, rather than 2011, then you have to weigh theEXTRA tax cost (i.e. difference in tax rates) that you would incur by taking 3 or 4 monthly payments in 2005, compared to the NEED for the money during 2005 rather than in January 2006 (when you could take the entire year’s money, or start monthly, quarterly, semi-annual, or annualwithdrawals.
If youdon’t need the money now, and waiting for the 5-year period to end in January 2011 is no problem, then wait until January to start.2005-09-19 13:32, By: dlztaxes, IP: [4.175.9.159]