does a 72(t) check change with the principle?

You are here:
< Back

L1: does a 72(t) check change with the principle?Suppose I had $213,000 in my IRA, and I elected to use the 72(t) option using theRequired Minimum Distributionmethod. Let”s suppose that gave me an annual withdrawal of $12,780.
Now fastforward to a year later. Suppose the principle on my IRA has increased to $230,000. Would my annual withdrawal go up because my principle went up? Would my annual withdrawal in this case be closer to $13,800 (or would it still be $12,780)?
In short, would my annual withdrawal be pretty much the same each year (no matter what the principle), or would the annual withdrawal change every year based upon the principle changing?
(I know that one”s increasing age changes the annual withdrawal amount. I”m just wondering if changes in the IRA”s principle also change the annual withdrawal amount.)2007-05-31 18:55, By: Geoffrey, IP: [24.9.247.108]

L2: does a 72(t) check change with the principle?Yes, if the prior year end account balance increases by 10% and the RMD divisor decreases by 2.5%, then your annual 72t distribution would increase by about 12.75% (1.10 X 1.025). Of course, the account balance needs to increase by 10% including the amount you took out during that year.2007-05-31 19:48, By: Alan S., IP: [24.116.66.98]

L2: does a 72(t) check change with the principle?Yes, but it can be downward, as well as upward. The question you should be asking is “Do I need a minimum fixed amount, or can I accept a LOWER figure if theportfolio goes down? Remember, if the INCOME is less than your fixed withdrawal amount, then you might have to sell an investment to get the cash for the distribution. If interest rates have gone up, the value of fixed interest investments have probably gone down. Just because the stock market has risen significantly over the past year or so, remember a few years ago when it went down, or the “crash” of 1986 or 87.2007-05-31 21:20, By: dlzallestaxes, IP: [141.151.73.184]

L2: does a 72(t) check change with the principle?Geoffrey:
My suggestion is for you to go to the calculators on this site … the center drop-down menu at the top of this page … and run some scenarios with all of your data. I ran age 55 (you didn”t tell usyour age) and your $213,000 IRA value forthe RMD method. This doesn”t come close to the $12,780 amount you mentioned for an annual distribution. In fact, using the reverse calculator and age 55 would take about $378,000 IRA value to generate $12,780.
Jim2007-06-01 06:29, By: Jim, IP: [24.252.195.14]

L2: does a 72(t) check change with the principle?Jim,
You are right. I was confused. Sorry! 🙂
And thanks to everyone for their replies!2007-06-04 18:04, By: Geoffrey, IP: [24.9.247.108]