72(t) payments and distribution for medical expens

L1: 72(t) payments and distribution for medical expensIf I have started 72(t) distributions, can I withdraw funds to pay for medical expenses in addition to my set 72(t) distributions and not have a penalty2004-01-31 07:45, By: G-T, IP: [24.145.242.199]
L2: 72(t) payments and distribution for medical expensYou won”t find a pure Black-N-White answer stated. However,conventional wisdom would says no since you would be altering the scheduled annual payment by taking an amount in excess of the scheduled SEPP distribution.
That”s probably why many will leave at least an emergency balance in an IRA outside the SEPP so that the type of withdrawal that you are planning won”t bust the SEPP.
2004-01-31 14:03, By: Gfw, IP: [66.73.174.181]

L2: 72(t) payments and distribution for medical expensThanks for the info. I guess if I pay for a PLR, I will know for sure. Then again, that decision would only apply to me and not anyone else.
I do disagree with the conventional wisdom theory. By taking a distribution for medical expenses, I am not modifying the original SEPP payment stream. This would be a distribution subject to a specific event (i.e. medical expenses) that is allowable by the Code. To agrue this would bust the SEPP would be a stretch, in my opinon.
2004-02-01 10:49, By: G-T, IP: [24.145.242.199]

L2: 72(t) payments and distribution for medical expensWe wish you good luck and I for one would be very interested in the outcome. I would definately check withthe IRA/Custodian to see how they will be coding the 1099 in the year the excess distribution occurs.
2004-02-01 10:53, By: Gfw, IP: [66.73.174.181]

L2: 72(t) payments and distribution for medical expensMy guess would be the 1099 would have a code of ” 1 ” and I would have to file Form 5329 to get an exception to the penalty.
But, do you think the IRA custodian would issue two separate 1099”s. One coded with a ” 2 ” for the SEPP payments and one coded with a ” 1 ” for the distribution regarding the medical expenses. If only one 1099 is issued with a code of ” 1 ” , that would not be good.

2004-02-01 11:17, By: G-T, IP: [24.145.242.199]

L2: 72(t) payments and distribution for medical expensHello G-T:
There are admittedly two sides to this argument:
1. Any additional withdrawal from the SEPP IRA is a modification; therefore the 10% penalty & interest applies.
2. An additional withdrawal from the SEPP IRA for a different permissible reason should not be considered a modification.
There is no clear cut answer becuase the Service has never ruled on the issue. If you need a definitive answer; certainly the corrct route is to make a PLR request. However, the PLR process is lengthy and expensive. On the presumption that your gross income is under $200,000 oer annum; the filing fee is $600. In adition to that, you need to hire some one (like me) who is experienced in the PLR process to prepare & prosecute the PLR; easily another $2000 or more in costs.
TheBadger
wjstecker@wispertel.net2004-02-01 13:01, By: TheBadger, IP: [38.116.134.130]

L2: 72(t) payments and distribution for medical expensGiven “The Badger”s” answer, have you considered alternative financing methods for the medical expenses like “home-equity loan?” In your situation you need to weigh all of the costs and time you will expend if you choose the PLR route. After you have considered these alternatives and have developed a plan, then you will be ready to move forward if the IRS answers your PLR with a “NO.”
Good luck
Jim2004-02-02 08:58, By: Jim, IP: [68.1.147.61]