Bust

L1: BustCan you give me an example of how one could go bust with a 72t? Because I don”t quite understand what this means. Thanks.2007-10-30 11:06, By: jim, IP: [76.223.129.214]
L2: BustJim,
Most references to “bust” in this forum mean that you did something that violated the rules of a 72t (as far as the IRS is concerned), and therefore exposed your entire payout to date to the 10% IRS early withdrawal penalty along with possible interest being tacked on by the IRS. Examples are: Taking any more or less $$ in a calendar year than the exact dollar amount that your plan calls for; adding money to the IRA or IRAs that make up your SEPP plan, or transferring IRA funds in or out of those IRA(s) that make upyour plan. You should go back over older posts on this site for more info, by changing the view (at top of forum) to “show all records” and then select 12 or 18 months to view and look for “busting a plan”subject reference. KEN2007-10-30 14:53, By: Ken, IP: [75.67.65.254]

L2: BustThe ironic part is that if your 72t IRA account balance actually does go “bust” by dropping to a -0- balance, your 72t plan isNOT considered “modified” or busted. True compassion in Sec 72……2007-10-30 20:46, By: Alan S., IP: [24.116.165.60]

L2: BustGood point, Alan. My thought here is that the term “busted” is more of a police term and less a financial term.
Ed2007-11-02 14:33, By: Ed_B, IP: [67.170.159.37]

L2: BustEd, but you must admit thatthe term”busted SEPP” demands greater attention than the officially correct term of “modified SEPP”.2007-11-02 17:31, By: Alan S., IP: [24.116.165.60]

L2: BustAlan:
Yes, I would agree with that. My point is similar to what others have posted here and that is that the term “bust” or “busted” is not well defined. This leads to some confusion as to exactly what constitutes a “bust”.
Years ago, a SEPP that ran out of money before it ran for 5 years or its owner reached age 59.5 was definitely a bust and, if I remember this correctly, the IRS was then free to tack on penalties and interest in retribution for this. Fortunately, they have moved away from the “kick them when they are down” philosophy and no longer do this. True compassion indeed!
Ed2007-11-08 11:39, By: Ed_B, IP: [67.170.159.37]