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L1: 72tI started a 72t in May 08′ and took afull year distribution. Do I need to wait until May 09′ to take the 09′ distribution or can I request it sooner.? My IRA is with Fidelity.2009-01-12 14:23, By: John, IP: []
L2: 72tJohn,As far as IRS is concerned, it is the gross total $$ that you take over each full calendar year that needs to be correct for your plan, so it can be taken at any time and in any frequency that adds up to the right total number. You need to see what Fidelity is willing to do to change the payment plan that you set up. I started a Schwab SEPP plan in 2006, taking semi annual payments in March and Sept of each year, and in early 2007, I changed it to monthly payments and they obliged me. A 2nd SEPP that I started at Vanguard on another IRA in May 2007 (to finance pmnts on 2nd home purchase) had 5 months of payments made in May 2007 (at my request), then they started monthly payments in June 2007 and forward. It is important that you specify the taxes to withhold when the payments change. If you use PCT method, it shd be fine. Call Fidelity and see what they can do. ONE CAUTION… If the MAY 2008 annual payment has “disappeared” so you need next annual PMNT in less than one year, you are probably just digging a hole that can’t be fixed next year when you cannot shorten the payment cycle like you can do this calendaryear.You may want to consider asking for monthly payments now– starting with JAN 2009. That is why I switched the semi annual to monthly on my first SEPP. It is almost like getting a paycheck, –vs. living off a shrinking nestegg. Good luck. KEN2009-01-12 17:59, By: Ken, IP: []

L3: 72tKen:>It is important that you specify the taxes to withhold when the payments change.I am curious about this statement. I thought that the IRS was onlyconcernedwith the gross amount of the annual 72t distributions and that the amount withheld for taxes was pretty much irrelevant… other than as a way to pay taxes without facing a large bill in April. Can you elaborate on this? Thanks.2009-01-12 18:19, By: Ed_B, IP: []

L4: 72tThe IRS IS only concerned with the gross amount of the distribution, at least as far as the validity of the 72t plan is concerned.I think that Ken was probably referring to the danger of making a major change and leaving the withholding decision up to the IRA custodian. Once funds are sent to the IRS, the taxpayer cannot get them back until next spring, unless they request an offsetting change of the withheld amount on future distributions. To avoid having toadjust withholding, be specific about the amount of taxes that will be withheld at each major change.The IRA custodian must withhold what the taxpayer wants, but if nothing is specified, a 10% IRA default rate applies. Some taxpayers prefer to avoid the potential mis communication exposure regarding tax withholding, and opt to address their payments through quarterly estimated tax payments to the IRS in order to eliminate another variable that the IRA custodian must address.You could make a case either way, but don’t take anything for granted when withholding is being used.2009-01-12 20:45, By: Alan S., IP: []

L5: 72tEd B,Alan guessed correctly on my concerns about tax withholdings, and that is why I said if you chose the % method, you shd be OK when changing payment frequencies. The PC diedafter I posted that reply above,and I am now back to my other home, and to the newer PCthat works well, so I just saw the question.KEN2009-01-13 21:11, By: Ken, IP: []