L1: 72tIs the 72t distribution amount based on a calendar year? Is this true if only two months are in the year in which distribution starts? Would appreciate reference to authority if possible. Thanks.2008-05-12 07:16, By: Sal, IP: [220.127.116.11]
L2: 72tAll 72-T distributions for the FIRST YEAR must be either the ANNUAL AMOUNT or a prorated amount based upon the number of months remaining in the FIRST YEAR. In you case, if the annual amount was $ 12,000, then you could either distribute $ 2,000 ( $ 12,000 x 2/12) or the full $ 12,000. The decision would be based more on taxes than cash needs probably, because you could take $ 2,000 in Nov/Dec, and then $ 12,000 in January.
If you had significant income already in the calendar year, then you might chose the prorated amount.
However, if you really needed $ 24,000 quickly, then take $ 12,000 in Nov/Dec and another $ 12,000 in January. But, if you are just taking the distributions for cash flow needs over the next 5 years, then you might spread out the 2nd calendar year monthly or quarterly, so as not to run out of money during the year, and then busting the plan.2008-05-12 18:29, By: dlzallestaxes, IP: [18.104.22.168]
L2: 72tI agree with dlz. This is another of those issues that cannot be found anywhere in the code, but is generally accepted practice since the IRS has never alleged that this constitutes a modification. There may be some specific PLRs several years back that provide more documented evidence of this. Perhaps Bill or Gordon can be more specific about findings of approval for these stub year options.2008-05-12 19:16, By: Alan S., IP: [22.214.171.124]
L2: 72tYou can start you SEPP anytime duringa year and in that first year take the full annual distribution.
In PLR 200105066 the IRS agreed to pro-rata distributions in the first year of the SEPP.2008-05-13 04:28, By: Gfw, IP: [126.96.36.199]