72T annuity payout
L1: 72T annuity payoutI”m 35 and will have some added expenses over the next 5-7 years while my kids are in daycare. If I were to convert 100K from an IRA to a 72T. Is there anyway to set up an annuity payment for 10 or 15 years or does every distribution circumstance require me to extend the payout to 59 1/2????2008-05-08 10:56, By: rjh, IP: [126.96.36.199]
L2: 72T annuity payoutAll 72(t) plans require minimum distributions for 5 full years in days, not calendar years, and you must reach actual age 59 1/2 before you may modify your distributions. If you had investments outside of your IRA then you could take periodic distributions to cover your daycare expenses. However, if you have after-tax dollars in a deferred annuity, you will come under 72(q) rules for withdrawals without the 10% penalty. Unfortunately the 72(q) rules work like the 72(t) rules so you have the age 59 1/2 and 5-year limits.
Best advice in your situation is to look for other sources of funds like a home-equity loan or some other source.
Jim2008-05-08 11:21, By: Jim, IP: [188.8.131.52]
L2: 72T annuity payoutrjh,Yeah, skip the 5 yr rule in this discussion, and remember thatfor you it is the “24 1/2 year rule” to get you to age 59 1/2, In addition, I plugged in your age 35 to the 72t calculator on this site, and using the highest paying one (AMORTIZATION & single life with current allowable interest rate of 3.57%) and your $100K balance, I got a withdrawal figure of only $4,366.72 per year as your gross payout, and after paying the taxes on it, that doesn”t look like it leaves much to cover daycare, while it locks in these withdrawals for a very long time, so this does not look like a goodsolution.Also, any “slip up” during that long time, such as adding in or taking out any other money withregard to thisIRA account, or not taking correct distribution in any year opens you to the 10% tax penalty on all withdrawals back to day one, plus interest. Ken2008-05-08 11:49, By: Ken, IP: [184.108.40.206]
L2: 72T annuity payoutSee if your employer will set up a “Dependent Care Spending Account” which could save you on the taxes.2008-05-08 13:56, By: dlzallestaxes, IP: [220.127.116.11]