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72t distribution and additional w/d taxes

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Byrealzero

L1: 72t distribution and additional w/d taxesIn 2004, I set upa 72t distribution. I received the distribution. Later in 2004, I had to withdraw an additional amount (not a 72t distribution). I realize the additional withdrawl will be subject to the 10% penality. My question is,
because I withdrew the additional amount beyond the 72t distribution,does that now place the 72t distribution with the 10% penality also, or does the 10% penalty only apply to the additional withdrawl?
Thanks.2005-04-03 08:20, By: realzero, IP: [66.225.38.150]

L2: 72t distribution and additional w/d taxesHello real zero:
Sorry to report that the 10% surtax applies to ALL of the distributions; not just the extra distribution.I am presuming that the extra distribution came from the same IRA as the SEPP distribution.Conversely, ifthe extra distribution came from a different IRA; then the 10% surtax would only apply to the extra distribution.
TheBadger
wjstecker@wispertel.net
2005-04-03 08:34, By: TheBadger, IP: [66.250.23.21]

L2: 72t distribution and additional w/d taxesThank you Badger for the information. It’s bad news, but, I can live with it.
Thanks again.
realzero2005-04-03 08:39, By: realzero, IP: [66.225.38.150]

L2: 72t distribution and additional w/d taxesHello realzero:
I have two additionals thoughts:
(1) All else being equal, your SEPP plan commenced in 2004 is “busted”. This means you CAN NOT make the same distribution in 2005 as you made in 2004; instead, you need to forget 2004 entirely and commence, if you so desire, an new SEPP plan commencing in 2005.
(2) You didn’t tell us what the additional distribution in 2004 was for. If, perchance, the additional distribution was for a different qualified reason; e.g. excess medical or post-secondary educational expenses; then a new opportunity (albeit slim) presents itself. No one has ever tested this issue of having a single IRA with a SEPP plan running and then taking an additional distribution form the same IRA for a qualified reason. If the penalty $$$ are significant, e.g. above $10k you might want to consider attempting to get a private letter ruling in your favor.
TheBadger
wjstecker@wispertel.net
2005-04-03 10:09, By: TheBadger, IP: [66.250.23.21]

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