72q change payment
L1: 72q change paymentI have a nonqualified annuity that I just set up in January and I am taking monthly payments under 72q since I am under age 59 1/2 yrs old. I have only received two monthly payments so far but I was trying to keep my premium amount in tact and I found I am withdrawing a little too much. Can I change my 72 q paperwork since I just started it so that I can take out a lower amount monthly?2009-04-02 20:17, By: Chris, IP: [18.104.22.168]
L2: 72q change paymentYes, you can reconstruct your plan in this case since it has just been initiated and you are in your first year. For example, you can reduce the interest rate below the max rate available for use in January, but not below -0-. You could also use the RMD method, which will knock about 40% off what the fixed distribution amounts produce.
Once you calculate a new amount for the year, just adjust your remaining monthly payments so that the payments you already received added to the remaining reduced payments, add up to the new annual distribution amount. Note that this change will be effective for the entire year as if you had started out this way.
This flexibility goes away after the first year ends, so be very careful not to reduce payments below what you need to live on. If you cut distributions too much so that you cannot cover your increased costs 4 or 5 years out, then you would be forced to bust your plan, and this idea would do more harm than good.
When you get your new calculations well documented, retain them for future reference. Your insurance company may or may not be interested in a copy of your new calculations. They may also not understand that you can do this, code your distribution as early, and force you to file a 5329 to claim the exception. If that is the case, just file the 5329 as most 72q or t participants are forced to do.
2009-04-02 21:19, By: Alan S., IP: [22.214.171.124]
L3: 72q change paymentRick:
You did not specfy whether you have a Fixed Annuity or a Variable Annuity, and that’s an important item. If you have a Fixed Annuity then you are at the mercy of the declared interest rate which may change annually, if you didn’t choose a multi-year option when you set it up. If you are using a Variable Annuity, then it’s understandable why your principal is dropping due to current market conditions. But the advantage of the VA will come into action when the market turns up and you will probably recoupe your losses and eventually see a larger contract / market value and your concerns will disappear.
Hope this helps.
Jim2009-04-03 13:44, By: Jim, IP: [126.96.36.199]