Changes 72t Distribution

L1: Changes 72t Distribution now have a new client that started a 72t IRA distribution in March 31,2000 with $226,000.00. He has been taking $1,625.41 per month. He was 49 years old when he started his 72t distribution. His account is only worth $92,000.00 as of April 2002. My concerns are that the market has been so bad for my new clients account that his 72t distribution account will run out of money long before he turns 59 1/2 years old. I am sure my new client is not in this boat alone. What wil be the negatives or penalities that my client may incur because of the account not paying out until he reaches 59 1/2 years old? Thank you for your prompt response to my question.2002-04-30 15:32, By: Charles, IP: [127.0.0.1]
L2: Changes 72t DistributionThis issue has come up more than once. There are a few PLRs requested on this subject, but to date I haven’t heard of any favorable responses.Some of us thought that it might be addressed in the final MD regs, but it wasn’t.In terms of penalties, general thought is that he would owe 10% plus interest on the past due penalties. You may want to consider getting your own PLRbased on your client’s facts and circumstances. 2002-04-30 15:36, By: Gfw, IP: [127.0.0.1]

L2: Changes 72t Distributionnow have a new client that started a 72t IRA distribution in March 31,2000 with $226,000.00. He has been taking $1,625.41 per month. He was 49 years old when he started his 72t distribution. His account is only worth $92,000.00 as of April 2002. My concerns are that the market has been so bad for my new clients account that his 72t distribution account will run out of money long before he turns 59 1/2 years old. I am sure my new client is not in this boat alone. What wil be the negatives or penalities that my client may incur because of the account not paying out until he reaches 59 1/2 years old? Thank you for your prompt response to my question.I just did some back-of-the-envelop math & figured out that your client would need to earn an average of 16% per annum for the next 8 or so years to “make to the finish line”. I would say, not impossible, but not very likely either. That leaves two options:(1) Terminate the SEPP right now & pay the surtaxes of approx. $3900 plus intervening interest of another $400 – $500. This stops the meter from running but does leave your client SEPP’less.(2) Jump into the murky waters of private letter rulings & attempt (there is no guarantee on this one) to get a favorable ruling for your client that would waive the surtax & interest.TheBadgerwjstecker@wispertel.net2002-04-30 16:20, By: TheBadger, IP: [127.0.0.1]