L1: 72(t) DistibutionI am receiving a 72(t) distribution, for nearly 5 years now. With the downturn in the stock markets I am at risk of losing my nest egg. Currently there isenough to pay off my home; I am not 59.5. Will there be a penalty if I decide to make a withdrawal to pay for house.2009-03-09 03:50, By: Smiles, IP: [126.96.36.199]
L2: 72(t) Distibution
Until your SEPP has run for 5 years AND you are age 59.5 or older, you cannot take more or less money from your SEPP. It is called a “substantially equal payment plan” for a reason.
That said, you can make a one time change from either the amortization or annuitization calculation methods to the lifetime / minimum distribution method. People sometimes do this to reduce the drain of their nest-egg due to poor market conditions. It usually provides about 1/2 of the payment that the other 2 SEPP calculation methods deliver.
Note that this can only be done once and that it cannot be un-done without incurring retro-active penalties on all that you have distributed from your SEPP up to age 59.5. If you decide to go with this, run the numbers to see if it will give you enough money to meet your expenses. If not, supplemental employment or some other source of income may be needed.
2009-03-09 16:31, By: Ed_B, IP: [188.8.131.52]
L3: 72(t) DistibutionEven if you could arrange the house payoff, it probably would not be a good idea unless your loan carries a confiscatory interest rate. Debt is very difficult to come by at this time and probably for an extended time, so paying off current debt is not particularly wise unless you are re- financing at a lower rate, or your balance is very low and you can no longer itemize the interest.2009-03-09 17:40, By: Alan S., IP: [184.108.40.206]