72t End Dates
L1: 72t End DatesMy birth date is 12/9/46 and my husband”s is 11/8/49.
We both started 72ts on 10/13/04. We both use the amortization calculation method and the distribution frequency is “Annually.”
My 72t has a distribution measuring period of “Calendar year.”
My husband”s 72t has a distribution measuring period of “Rolling 12 months.”
Looking at the various calculators, I don”t see any place to distinguish between our 2 measuring periods. So, my question is: When can each of us start modifying our distributions without incurring the 10% penalty?
Thanks, in advance, for any help you can give!2008-03-04 18:40, By: Vicki, IP: [126.96.36.199]
L2: 72t End DatesI”ve never heard of a “Rolling 12 month” measuring period. All I”ve ever heard of is Calendar Year, with the ability to take a full ANNUAL AMOUNT in the first calendar year, or prorata for the months in the first year, which in your case would have been 3 months, or 25% of the annual amount.
Either way, the end dates will be 10/13/2009 for both of you.
While I think that your husband”s starting his at about 55 made sense, I would have questioned your decision to start yours at almost 58 years old and lock yourself in until you were almost 63. Wasn”t there any other way to get you to age 59 1/2, and then have complete flexibility on distributions without penalty ? Oh well, you only have another 19 months to go on both of yours anyway.2008-03-04 18:57, By: dlzallestaxes, IP: [188.8.131.52]
L2: 72t End DatesOur IRAs are our only source of income which is the reason why we both initiated 72ts. The forms we filled out (from Merrill Lynch) allowed us to choose between the annual distribution and 12-month rolling distribution. As I recall, the reasoning had to do with the difference of our ages. I will definitely ask my ML advisor about the end dates, I just wanted to refresh my memory on the difference before I contacted him.
Maybe there was a difference between the 2 methods when we initiated them….
Thanks for your prompt reply!2008-03-05 11:49, By: Vicki, IP: [184.108.40.206]
L2: 72t End DatesPerhaps the difference is that one of you took (3) monthly distributions (starting in October) in the first year, while the other took the “whole calendar year” ( 12 month) payout in thecalendar year 2004. The bottom line is (as DLZ said above) that 5 full years have to pass after first distribution was paid on each of the respective plans (because you will both also be over 59 1/2 at that point) before either of you can start taking otherdistributions from those respective SEPP IRAs without busting the plan and incurring penalties. If you are over 59 1/2 and have another IRA not connected to your SEPP72(t) plan, you can take money from that IRA and not incur any problems with the SEPP plan IRA that is still running. If youwant to lower yourremaining 72(t) payouts, and are using either amortization or annuitization menthods, there is a way to switch to RMD method for the rest of the 72(t) plan, which almost always lowers the payout, but it has to be recalculated each year. KEN2008-03-05 20:18, By: Ken, IP: [220.127.116.11]
L2: 72t End DatesI also have never heard of the “rolling 12 month” payout period but am wondering whether we are looking at a difference in semantics. One could interpret a rolling 12 month period as a partial payment for the 1st year with full payments in all subsequent years. That might also imply that a stub beginnng year would also have a stub ending year but as Vicki says, this is not at all clear. I”m sure that her ML advisor can clear it up but it will be good for her to have some info from this site prior to that conversation.
Ed2008-03-08 12:46, By: Ed_B, IP: [18.104.22.168]