72t distributions

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L1: 72t distributionsI have a question about possibly using a 72t program to liquidate my IRA immediately. I was born 2-12-64 andI thought I had my answers but now more confused because I’m reading 2 different things. The first is that I read I have to take a 72t for 5 years or 59 1/2, which ever is longer, equal yearly distributions. In my case, that will be approximately 8 years if I begin now. However, I also read that the yearly distributions would be based on my life expectantcy, which is another 25 – 30 years, so I wouldn’t get distributions for only 8 years as they’d be distributed over 25 -30 years. So, which is it?2015-07-23 01:48, By: Still paying for college, IP: []
L2: 72t distributionsPlug in your particulars on the 72T calculatorSEPP PLAN that is on this website, and review the year by year prediction for what will happen to the balance in your IRA, while seeing what AMORTIZATION (the highest paying option) will yield for you in a yearly payment.The 72T planwill not liquidate your IRA immediately, and in most cases, there could be an amount similar to what you started with in the IRA after you turn 59 1/2 when in your caseyou can end the specific annual payments, unless you make some very bad choices in your investments.2015-07-23 03:23, By: Ken, IP: []

L3: 72t distributionsOk thanks…..I thought for some reason the entire balance would be liquidated from now until I am 59 1/2. I get it now. So, how do I avoid the 10% penalty from the government? Also, I looked at the distribution form from Charles Schwab and there isn’t anything on the form about which of the 3 methods to utilize (amort, annuity, etc). how will they know which method I want?2015-07-31 17:51, By: Still Paying for College, IP: []

L4: 72t distributionsYour username indicates you owe for college for yourself or someone in your immediate family. Since those payments other than student loan payments get their own higher education penalty waiver, you could partition your IRA to create an IRA account to be used for those distributions. If you still need a separate 72t plan in addition, it will be smaller and therefore reduce the potential cost of busting the plan.
As for the calculation method, you should select the amortization method because it produces the highest distribution per dollar of plan balance. Schwab used to provide support for 72t plans including providing the exception code on the 1099R, so perhaps they intend to check your calculations, and would like to know the method you selected2015-07-31 20:09, By: Alan S, IP: []

L5: 72t distributionsI would have to research if you can take penalty free withdrawals from an IRA to pay student loans after you have graduated.2015-07-31 23:19, By: dlzallestaxes, IP: []

L6: 72t distributionsI am on the SEPP calculator and it says Total IRA Value and Amount to SEPP plan. What do I put there? the same amount in each field? I would like to deplete the entire account so do I put the same amount in each line? Also, the market fluctuates all of the time, does that amount have to be accurate? If so, how do you do it?
It also says Use Uniform Table, Use Joint Table and Use Pro Rata with yes or no responses. Which do I use?
Lastly, what happens at 59 1/2? Is the slate cleaned as if nothing happened? IE……will the leftover, remaining IRA balance be available for full withdrawal in a lump sum without the 10% penalty? Or is there a yearly maximum I have to take each year?
2015-08-06 21:21, By: Still Paying for College, IP: []

L2: 72t distributionsSo, which is it?Both.
First: The plan must last the longer of 5 years or until age 59.5 – then it can end.
Second: The amount that may be drawn from the plan is calculated based on your life expectancy.
2015-07-23 11:13, By: Gfw, IP: []

L3: 72t distributionsThink of it this way. The annual amount is calculated over 32 years at your age. So, if there is no growth or income, like in today’s money market or savings accounts, then in the 8 years until you are 59 1/2 you will withdraw 25% (8/32) of the balance.
Now assume that the income and growth are a combined 4%/year, and you withdraw 4% of the balance each year. In that case you will have the same amount at 59 1/2, and every year before then, that you started with.2015-07-31 23:17, By: dlzalllestaxes, IP: []