72T Distributions

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L1: 72T DistributionsWhen taking 72t equal distributions – the 5 year or 59 1/2 guidelines are conflicting in my mind. I thought you could stop taking 72T distributions after a 5 year period regardless of whether you were 59 1/2 yet; however, I am being told the 72T distributions must be taken until you reach age 59 1/2. There is an option apparently that you can make a one time change to the distributions, but I just want to stop them without taking any tax penalty (10%) for prior year distributions. Anyone have the same circumstances or know of a loop hole to get around any tax penalties if you stop a 72T distribution before you reach age 59 1/2?2007-11-05 05:01, By: Willie401, IP: [71.100.174.146]
L2: 72T DistributionsHello Willie:
What you are hearing is correct — once started, SEPP distributions must continue uninterrupted for the LONGER OF 5 years or attaining the age of 59 1/2. Further, the measurement of these end dates are very specific. 5 years is 1826 days as measured from the date of the 1st distribution; age 59 1/2 is your 59th birthday plus 183 days.
In the context of your question, there are three loopholes:
1. Death (as in yours).
2. Disability (as in yours).
3. You may also switch to the minimum method & when doing so you may elect the use of a different life expectancy table. Therefore you could adopt the uniform life expectancy table which will generally result in an annual distribution in the neighborhood of 2.5% of the value of your IRA.
TheBadger
wjstecker@wispertel.net
2007-11-05 05:14, By: TheBadger, IP: [72.42.67.102]