72t rate to use and balances

L1: 72t rate to use and balancesI retired in March 2006 at 56. I had to transferred all my 401K and pension to IRAs, with the exception of some funds to live on this year. I plan to start 72t in January (I will be 57). What balances do I use for the calculation (the total at the time of my retirement? or the total at Dec 2006?) and for the interest rate – what month should I use?2006-08-18 09:58, By: Garret, IP: [206.246.217.138]
L2: 72t rate to use and balancesGarrett:
Let”s answer the easy questions first: If you start 72(t) distributions in January, 2007, you may use either November or December, 2006, rates. It”s always one of the two previous months before starting distributions. Also, the “start date” for your SEPP Plan is the date of your first distribution, in your case January, 2007. Suggestion: If you are using monthly distributions, pick a date between the 3rd and 12th of the month so you will have time to recover if the December distribution gets missed for some reason. Watch this closely.
As to which “account balance” to use, in your case I think trying to use the March, 2006, balance in your company plans will just cause problems trying to justify. So my suggestion is to use the account value of your SEPP Plan IRA on 12-31-2006. Which leads me into another recommendation, which is strongly advocated by members of this board, and that is to split your IRA into the SEPP Plan IRA and a non-plan IRA for “emergency fund” access. By doing this you can withdraw funds from the Non-SEPP IRA, pay the tax and penalty, and not have to “bust” the SEPP IRA.
Good luck.
Jim2006-08-18 11:08, By: Jim, IP: [70.184.2.72]

L2: 72t rate to use and balancesBy doing this you can withdraw funds from the Non-SEPP IRA, pay the tax and penalty, and not have to “bust” the SEPP IRA.

. . . . and, you can access funds in this non-sepp IRA for certain expenses that are exempt from the penalty. For example, medical expenses, education expenses, etc.
You will have to pay tax on the withdrawal (just like your SEPP distribution), but if the expenses qualify, no penalty.
2006-08-19 11:01, By: gary T, IP: [24.145.246.83]