Annual 72t distribution timing

L1: Annual 72t distribution timingCan a 72t be taken now (October 06) as a 1 time lump amount of say $30,000 – then $30,000 January of 07?
In addition – can we do above and then beginning in 2008 – take it monthly ($2500) per month vs. a lump sum?
Client has some debt they want to pay off ASAP and then go on monthly as soon as possible.
2006-10-04 09:51, By: Kim, IP: [24.172.244.211]

L2: Annual 72t distribution timingYes.
Yes.
Yes.
Jim2006-10-04 10:00, By: Jim, IP: [70.184.2.72]

L2: Annual 72t distribution timingHi Jim – thanks for the response. Please don”t take this personally, but can you tell you how you know the answer to these questions. In otherwords, what are your creditials? Just want to make sure I can rely on your response. I hear the food in jail stinks. :)2006-10-04 13:36, By: Kim, IP: [24.172.244.211]

L2: Annual 72t distribution timingHi Kim. No problem asking your question. I know my response was short, but then I usually get verbose in my responses. I am a Financial Planner and have been working with 72(t) since 1994
The link below will take you to the IRS web site and to 72(t) specific FAQ”s. You can probably get the answers to your questions by looking at the FAQ”s on this site also. I also copied part of the second FAQ on the IRS site which points out that distributions must be made “not less frequently than annually” which lays the ground work for my responses to your questions. The key is that once you establish the methodology for distributions, then you have to stick to it, unless you make the one-time change to the RMD, or MD, method. If your plan includes “recalculation” then you will probably have a varying distribution amount each year. But if you go with a fixed amount, which appears to be the intent based on your question, then you will have the same amount ($30,000) each year. You have the freedom to take a single distribution for $30k each year, or you may split it up into monthly, quarterly, semi-annual, or other weird combinations as long as the total, annual amount equals $30k.
http://www.irs.gov/retirement/article/0,,id=103045,00.html
Section 72(t)(2)(A)(iv) provides, in part, that if distributions are part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancy) of the employee and beneficiary, the tax described in section72(t)(1) will not be applicable.
Hope this helps and don”t be concerned about asking questions. I”ve been whacked more times than I care to remember when I haven”t gotten something exactly correct, and that”s what”s so good about the folks who post on this board.
Jim2006-10-04 14:57, By: Jim, IP: [70.184.2.72]

L2: Annual 72t distribution timingJim – Ah, you obviously do know your stuff. Thank you so much for taking the time and effort to answer my question so thoroughly. I feel much better now. Experience has made me EXTREMELY leary of the IRS and trying to do self interpretation of their laws. Thanks again.2006-10-04 15:07, By: Kim, IP: [24.172.244.211]