Change to 72T amount

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L1: Change to 72T amountI have been taking 72T distributions for 3 years now. A friend, who is also taking 72T distributions told me her financial advisor told her that she can change her distribution ONCE, and ONLY to a lesser amount.I thought once you started withdrawing it was 5 years or to 59 1/2 and you were not allowed to change it until that occured. What’s the truth?2010-01-22 22:17, By: RBA, IP: []
L2: Change to 72T amountSee below…Rev.Rul. 2002-62 Sectuion 2.03(b) One-time change to required minimum distribution method. An individual who begins distributions in a year using either the fixed amortization method or the fixed annuitization method may in any subsequent year switch to the required minimum distribution method to determine the payment for the year of the switch and all subsequent years and the change in method will not be treated as a modification within the meaning of 72(t)(4). Once a change is made under this paragraph, the required minimum distribution method must be followed in all subsequent years. Any subsequent change will be a modification for purposes of 72(t)(4). 2010-01-22 22:27, By: Gfw, IP: []

L3: Change to 72T amountEven if you have already had a regular January 2010 payment sent, you could recalculate to Minimum Distribution method for 2010, and adjust the remaining 2010 payments so they (when added to already received payments in 2010) total the MD total payment for 2010.In the year of this change, it usually decreases the payment by 40-60 percent, so later on in the year, the YTD NON-MD method payments could already exceed the total MD payment, and it may not be an option to make the change at that point. Make sure you understand how to compute the MD payment for 2010 (using 12/31/09 72t Acct balance and correct age in 2010, etc.), and that it was to be redone in similar fashioneach year after that (with different age and balance factors) –until the 72t is over. Ken2010-01-22 22:52, By: Ken, IP: []

L4: Change to 72T amountThe reason your friend referred to a lesser amount for the change is probably because the MD method without substantial account balance growth will always result in a lower amount, typically 40-60 as Ken indicated.However, if the account has excellent growth such as what the market has produced over the last 10 months, the MD method might actually generate an increase, rare as it might be. For the same reason, you can see that the MD method can result in your annual distribution changing dramatically from year to year, and this makes budgeting of expenses all the more challenging. The large swings can be controlled somewhat by the type of investments you use for the plan assets.2010-01-23 05:03, By: Alan S., IP: []