72t dist

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L1: 72t distI have a friend that is leaving work (retiring soon) that is interested in calculations for the 72t method….She is 57, dob 8/11/51 leaving her workplace April 09′ in which she will still be 57. Has 251k in her retirement plan and would like to start receiving her ret as soon as possible….can she use the 5 yr payout w/72t and what would her benefits be?U’ people are the best! ThanksMichael2008-11-19 08:33, By: Big Mike, IP: []
L2: 72t distMerely look in the left menu for 72(t)/SEPP Plans, Calculators, 72(t) Calculator or merely click on http://72t.net/Sepp/Irc72tCalculator.aspxEnter the information that you have – age is her attained age this year if the plan is started this year – and click teh calculate button.2008-11-19 09:49, By: Gfw, IP: []

L2: 72t distMichael,She could set up a plan, but only after other options have been checked out. Next spring she will have less than 2 years to get to 59.5, and a 72t plan would bind her to the plan for 5 years.She should check with her plan administrator to determine if the plan will offer either flexible or fixed distributions to her until she is 59.5. At that time she could roll it over to an IRA, but until then any distributions directly from the plan that she separated from at age 55 or later are penalty free. That would provide her with funding without the penalty for the few months she has left to reach 59.5.Hopefully, she has enough to retire on in total, because the 251,000 will not go far in covering costs for 3 decades. If she takes other employment, it will be best not to have a 72t plan in place under which she would draw down her retirement funds prematurely while possibly paying extra taxes in the process. Another danger of setting up a 72t plan with 251,000 is that by itself it may not be enough to live on and that would considerably increase the risk that she would have to bust the plan by taking out more. Of course, she may have other assets that we are not aware of, so the entire picture needs to be considered.Note that if she busted a 72t plan after age 59.5, she would have to pay the penalty and interest on all distributions taken prior to 59.5, but those taken after that date would not be penalized. 2008-11-19 09:58, By: Alan S., IP: []

L2: 72t distMy prior post was not worded very well – note that in the 2nd paragraph my reference to the “plan” was to the retirement plan with her employer, not the potential 72t plan. In this case a 72t plan should be avoided unless it is a last resort situation, and in that case it is a very useful option to fall back on.2008-11-19 10:02, By: Alan S., IP: []