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Carrier Cancels 72t

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ByWilly

L1: Carrier Cancels 72tI have a client who was receiving 72t distributions on a VA through Skandia. She recently took a $5000 add’l distribution. She then found out that Skandia has now cancelled the 72t and she will no longer be receiving her monthly checks.
Does anyone know if the carrier is allowed to do this? What are the ramifications for my client? I have heard that this may cause her IRA to become classified as Non-qualified. Any information would be greatly appreciated.2004-11-18 07:14, By: Willy, IP: [68.255.236.116]

L2: Carrier Cancels 72tInsufficient information.
If the total of the $5,000 plus SEPP withdrawals is less than or equal to the scheduled annual amount, then she has no problem. However, I’m guessing that this is not the case.
When your client took the extra $5,000, did that amount together with other scheduled withdrawals exceed the planed annual distribution? If yes, then Scandia didn”tcancel the SEPP, your client busted the SEPP. A busted SEPP results in an IRS 10% penalty on all previousSEPPwithdrawals, plus interest on past due penalties.2004-11-18 07:25, By: Gfw, IP: [172.16.1.71]

L2: Carrier Cancels 72tIs it normal for a Trustee to do what Skandia did? I have had a few clients who had no other alternative other than to bust their SEPP and take an additional one-time distribution, but I have not encountered a trustee who withheld future systematic 72(t) withdrawals.2004-11-18 12:25, By: Roger, IP: [209.114.244.70]

L2: Carrier Cancels 72tScandia is probably under no obligation to make, or continue, systematic withdrawals.
They are probably trying to distance themselves from what they believe to be a busted SEPP when it’s time for them to do a form 1099, they will probably use a code other than 2′.
You may want to contact Scandia – they may give you a few more details.2004-11-18 12:36, By: Gfw, IP: [172.16.1.71]

L2: Carrier Cancels 72tthanks guys. i am going to see her next week to find out exactly what happened. hopefully, she hasn’t put herself into a bad situationl.2004-11-23 08:46, By: willy, IP: [68.255.166.180]

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