5 year rule

L1: 5 year rule
I read that if you start a 72t at ,lets use,age 58 and then bust the SEPP at age 61 you will be penalized for busting the sepp but only on the time that you took out distrubtions prior to 59 1/2. In this case it would be 1 1/2 years not the entire 3 years.
I used Gfw software to run an example based on the above scenario and on the last page where it shows the “Cost to Bust” page is showed the penalty applied to all years NOT just the ones before 59 1/2.
Does anybody have any thoughts on this or PLR to support either case.
Thanks,
Nick2007-12-20 12:23, By: Nick, IP: [12.31.97.43]

L2: 5 year ruleThe penalty and back interest would only apply to the distributionsmade prior to the age of 59.5 and not allthe distributions after age 59.5.
With that said, at age 58, I would probably find other alternativesto a SEPP. It might be cheaper to borrow the money if that is an option.2007-12-20 14:16, By: gfw, IP: [216.80.125.206]