72t distributions from IRA

L1: 72t distributions from IRAEarly distributions without penalty from IRA under IRC 72t “5 yr or 59 1/2 years of age, whichever is later” are in fifth year. These distributions are being taken from an annuity (privately purchased through a broker) that is within the IRA (purchased with IRA funds).In 2002 client (now older than 59 1/2 years) changed the annual distribution amount by inadvertently taking more than the correct amount. (Error by broker and annuity holder (Northbrook) to let him do it without warning him of penalties consequence.) Broker told him to roll amount back into his IRA, which was done within sixty days of distribution, but NOT back into the annuity which Northbrook refused to allow.Will this avoid the penalties connected with 72t inasmuch as the money is back in the IRA? Client will take out proper amount undr 72t once we decide what should be done.I can’t find anything like this in the code or regulations.2002-07-09 17:23, By: Don, IP: [127.0.0.1]
L2: 72t distributions from IRAYou didn’t mention any amounts, so I’m going to assume that the excess was a significant amount.Will it avoid the penalties? Probably not. But, one question that you’ll want to find out now is how will the IRA Custodian/Trustee be filling out the 1099R. 2002-07-10 11:09, By: Gfw, IP: [127.0.0.1]

L2: 72t distributions from IRAThe amounts are substantial, over 20K distribution per year. Potential penalties total about 11K plus interest.2002-07-10 14:21, By: Don, IP: [127.0.0.1]

L2: 72t distributions from IRAI think the question was, how much additional was taken out for 2002. From your answer it appears that 20000 per year was taken for 5 years. Remember the rule is “Substantially Equal Periodic Payments” not exactly equal payments2002-07-23 22:42, By: merrillst, IP: [127.0.0.1]

L2: 72t distributions from IRA>>Remember the rule is “Substantially Equal Periodic Payments” not exactly equal paymentsActually the substantially equal refers to the fact that the payments are to be Substantially Equal over remaining life expectancy.How much variance? Not much allowed. In “Arnold v. Comm”, $4,000 was definately too much. You may want to read 89-25 where the reference is to “the amount to be distributed annually” and not to the estimated amount to be distributed annually.2002-07-24 08:59, By: Gfw, IP: [127.0.0.1]