L1: 72(t)I am currently 48 YOA, retired from a government agencyand am considering setting up a 72t because of my ageto avoid the 10% penenality. If I wait till I am 50 YOA, can Ijust establish an account with a qualified company to manage my monies and just take out the amount I need, either monthly or yearly (annumity) andavoid the 10% penality?2009-05-03 13:59, By: Glen, IP: [220.127.116.11]
You may be referring to the age 50 defined benefit plan exception for gov’t public safety employees under Sec 828 of the PPA. If so, that would only apply to eligible employees who separate from service at 50, not to those who separate prior to 50 and then wait to reach 50. This is the same way the age 55 rule applies to other terminating employees. Is this what you were referring to?
If so, you may need to activate the 72t plan after rolling over the lump sum to an IRA, even though the 11+ year interval to age 59.5 is a long term and it’s difficult to tell how much you will need over the entire period.
2009-05-03 23:51, By: Alan S., IP: [18.104.22.168]
L3: 72(t)Yes, this is what Iwas inquiring about. So what your saying is that no matte what I will be subject to the 10% penality if I make any withdrawals unless I activate the 72(t), correct? Can you give me the name of an individual who is knowledgeable with the 72(t) in the Harrisonburg, VA area? I have contected several and there knowledge is limited. I do not want to make a mistake at this time in my life, especially with the economy the way it is.2009-05-04 14:36, By: Glen, IP: [22.214.171.124]
L4: 72(t)Sorry, cannot help with the referral.
If you take a lifetime annuity based on your life expectancy of the joint life expectancies of yourself and your beneficiary, there will be no penalty, but your decision is irrevocable, and may not turn out to be the best decision in the long run.
On the other hand, if you are offered a lump sum distribution or other flexible options, then the penalty will apply unless you roll the lump sum to an IRA and start a 72t plan. And a 72t plan, as you know offers little flexibility and if you start one, it must continue to age 59.5, which is longer than the 5 year requirement.
2009-05-04 23:48, By: Alan S., IP: [126.96.36.199]