additional withdrawals

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L1: additional withdrawalsI am 51 years old and plan to roll my 401K into an IRA so that I can make 72t withdrawals. Say the maximum that I can withdraw using the 72t method is $35K per year and I need an additional $10K. Can I make that withdrawal from the 401k and pay the 10% penalty?
Thanks2013-09-02 01:12, By: Eurmania, IP: []

L2: additional withdrawalsIf you left some of your 401k balance in that plan, you could do that. Otherwise, it is more practical to do a direct rollover of the entire 401k into a rollover IRA, and then transfer the portion you might need as an emergency fund to a second IRA which is available subject to penalty. Then set up the 72t plan using the first IRA balance only. Recognize that starting a plan that must last as long as 8.5 years is a planning challenge and you might well need the second IRA that is not part of the 72t plan.2013-09-02 02:57, By: Alan S., IP: []

L2: additional withdrawalsThere is 4 months left in 2013. How much do you need in the rest of 2013 ? Do you need the extra $ 10,000 in 2013 or 2014 ?
Remember that you can take either $ 11,667 or $ 35,000 in 2013, so if you were expecting to take the prorated 4/12 in 2013, you should take the full $ 35,000 which will actually give you an extra $ 23,333 as a total buffer for 2013 and 2014 which is an excess of $ 10,000 in each of these first two calendar years.2013-09-02 04:36, By: dlzallestaxes, IP: []

L2: additional withdrawalsAll-
Thanks for the replies. It seems like the way to go is to have two IRAs, one for the 72t and one for emergency withdawals.2013-09-03 12:40, By: eurmania, IP: []

L3: additional withdrawalsBut you did not answer when you need the extra $ 10,000 and for what purpose. Maybe it qualifies under a different exception, but we cannot help you if you don’t answer our questions.2013-09-03 14:12, By: dlzallestaxes, IP: []

L3: additional withdrawalsIdeally, a traditional IRA should not be labeled “for emergency”.2013-10-09 18:47, By: Joel, IP: []

L4: additional withdrawalsJoel, I think he means the second IRA is the Non-SEPP (or Non-72T)IRA that can be tapped for a withdrawal in an emergency (prior to his 72T plan ending) with the 10% early withdrawal penalty only applying to that withdrawal, and not putting his entire SEPP plan’s withdrawals in jeopardy of being penalized another 10% beyond the taxes he paid.2013-10-09 20:22, By: Ken, IP: []

L5: additional withdrawalsPerhaps “emergency” is a misleading term. The non SEPP IRA account is available for any distributions in excess of the SEPP distributions whether there is an actual emergency or not. The emergency becomes the retroactive penalty payment if you have no choice but to bust your SEPP.
This additional distribution may or may not qualify for it’s own penalty exception, but it will not qualify for the SEPP penalty exception. For example, if the distribution is due to a costly medical condition or for higher education expenses of the IRA owner or immediate family members, the additional distribution will qualify for the appropriate penalty exception on Form 5329. Conversely, if ordinary expenses are now too high to be covered by the SEPP distribution, the additional distribution from the non SEPP IRA will be subject to penalty as well as ordinary income tax.
2013-10-10 00:46, By: Alan S, IP: []