changing annual distribution date for existing 72t
L1: changing annual distribution date for existing 72tI setup a 72t plan last year using the fixed amortization method. I chose to receive annual payments, which began on Oct 25, 2007. I want to know if I can now change the distribution date from Oct 2008to June 2008. The annual amount will stay the same. Fidelity is willing to change the date but warned me that the IRS might consider this to be a violation of my agreement. I have read comments on this site that indicate that the date doesn”t matter as long as it is in the same year. I have also read comments (in the “final thoughts” section) that any change to the schedule could break the plan and incur penalties. Does anyone know for sure if it is OK with the IRS if Ichange the date of my annual distribution within the same calendar year?2008-05-12 13:08, By: Papa, IP: [18.104.22.168]
L2: changing annual distribution date for existing 72tYou can change the date. The tax code does not define what exactly is considered a modification of a plan, so all we have to go on are a limited series of rulings, mostly private letter rulings over the past 20 years. There has never been a problem with respect to changing the distribution pattern within a calendar year as long as the annual total is distributed. The only related constraint in the tax code is that the distributions cannot be made less frequently than annually.
This type of change you plan is not contemplated in the “final thoughts” section as the type of change that presents a potential problem. Perhaps the moderators of this site know of a ruling or notice that firms this up somewhat better for you, but I cannot recall ever seeing a post where the IRS questioned what you propose.2008-05-12 15:16, By: Alan S., IP: [22.214.171.124]
L2: changing annual distribution date for existing 72tI don”t think that “Fidelity” is making that observation. I think that it is an inexperienced rep who is CYA in saying the IRS “may” because he doesn”t know, and is just covering himself this way.
See my recent comments about the fact that the frequency of payments is immaterial, and can change every year, so long as the annual amount never changes.2008-05-12 17:56, By: dlzallestaxes, IP: [126.96.36.199]