72T – IRA

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L1: 72T – IRAI retired early a result of company down sizing. I rolled my 401k into an IRA account with Fidelity. On January 10, 2007 I began receiving SEPP distributions. In light of the current financial crisis and volatility within the stock market; I want to change my account to an interest bearing cash only IRA account. My question is can I do this without interfering with my current SEPP distributions or would this cause any problems with the IRS?My concern is that my money will not last until I am 59 1/2; I will be 54 this December.I receive monthly SEPPdistributions of $2523.18. Method used to calculate SEPP amortization. As of September 30, 2008 my balance was $366.508.29. My portfolio consist of bond funds66%, stock funds 20.33% and short-term funds 13.58%.Thank you2008-11-25 20:58, By: POB, IP: []
L2: 72T – IRAThe only requirement to avoid busting a SEPP 72-T plan is that you take the same annual distribution every year. However, if by doing this you exhaust the funds in the applicable IRA accounts before reaching the later of 59 1/2 or 5 years, then the IRS does not consider you as having busted the plan if there is no more in the account.Youmust continue to take yoursame monthly payments of $ 2,523.18 until that happens.If you earn 2% per year in your interest-bearing cash account, you will earn $ 7,330 a year, and will have to deplete your principal by about $ 23,000 per year to sustain the $ 30,278.16 required annual distributions until you reach 59 1/2.If you can live on less than that, you can make a one-time change to the other calculation method.2008-11-25 21:38, By: dlzallestaxes, IP: []