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L1: 72T PLAN DECREASEI am in a 72T plan that was started in Jan 2008. I have seen my account go from $540,000 to $400,000 in this time. I am currently withdrawing $1600 monthly from the plan. This market scares me. I am afraid that the plan may go down more in the 5 year time frame that the 72Tis set up for. Would it be wise to bust the plan by stopping it and pay the penalty or ride the market out. Your help is needed.2008-10-04 09:27, By: rj, IP: []
L2: 72T PLAN DECREASEThe fact that the SEPP 72-T plan value has declined will not change your annual (or monthly) distribution requirement (unless you switch to the alternative minimum distribution method which changes the distribution amount every year based upon 12/31 values.If you leave it alone, the worst that would happen would be that it would not last as long as if it had not declined. If you got to the point that there was not enough left some year before you were the later of 59 1/2 or 5 years in the plan, then the IRS has stated that there would not be any penalty for withdrawing the entire balance in that final year, even though it was less than the annual required distribution.If your investments would be the same inside of or outside of the SEPP 72-T, there is no difference. Either way they are in an IRA. Either way distributions are taxed at regular tax rates, which are usually 25%. Since you obviously need these distributions, or you would not have set up the SEPP 72-T, why would you want to subject yourself to an extra 10% penalty on all of the distributions if they came out of a traditional IRA, when you can save that 10% penalty with the SEPP 72-T approach, which is why you set it up in the first place.If you are concerned about future declines, then you can change your investments within the SEPP 72-T, just as you can do in a regular IRA, or any non-retirement account.2008-10-04 09:55, By: dlzallestaxes, IP: []