Do I have a big problem?

L1: Do I have a big problem?I started my 72T (first distribution) in December 2002. I took out a lump sum in February 2003 to assist my son in a home purchase. I was aware of the 10% penalty but…. My advisor at AG Edwards infomed my today that I had to re start a brand new72T based on the new rules of 2003. I would be getting about $1,000.00 less per month in that case. My question is…is he correct? I amquite upset as he did not tell me that then.He only said I would have to pay the penalty. Can I resume my 72T as it was in 2002 or must I be forced to starve?
Thanks!!
2003-05-16 20:26, By: PJ, IP: [127.0.0.1]

L2: Do I have a big problem?Hello PJ:
Based on thelimited information you have provided, you appear to have two fundamental choices:
1. Treat theextra distribution in February for the home purchase as a modification of the SEPP program. In this case, you would have to pay the penalty on the December 2002 distribution, but presumably the Feb 2003 distribution qualifies under the home purchase exception, so no penalty there; then start a new SEPP programin 2003 using 2003 rules.
2. A more dangerous route is to simplycontinue your 2002 program implicitly saying that in addition to SEPP distributions, other qualified distrbutions from the same IRA are permissible. This is very dangerous ground.The IRS has never ruled on this issueand there is interpretative theory on both sides of the argument. The only way I would head down this path is to get a private letter ruling as the downside of cummulative penalties if you are wrong is simply too high.
TheBadger
wjstecker@wispertel.net
2003-05-17 08:05, By: TheBadger, IP: [127.0.0.1]