Does active 72t plan prohibit other approved withdrawals
L1: Does active 72t plan prohibit other approved withdrawals
Does an active 72t plan prohibit other normally approved IRA withdrawals. I’m specifically interested if having an active 72t plan running would prohibit other standard pre-59 1/2 withdrawals such as approved education expense?
2017-12-26 19:51, By: Q&A, IP: [184.108.40.206]
L2: Does active 72t plan prohibit other approved withdrawals
Do a search for “Benz v. Internal Revenue Service”.
The above tax court case allowed a distribution for higher education expenses in addition to the SEPP distribution without busting the plan. However, trying to use this exception will likely result in an extended period of debate with the IRS, first to make them aware of this case, and then to accept it as applicable to everyone instead of just that taxpayer. Therefore, there still is a major risk of busting your plan, but if you accept that risk and take the additional distribution anyway, you at least have a case to present. You would probably file a 5329 to claim exception code 12 and then attach an explanatory statement indicating that there are two exceptions – for the SEPP amount code 02 and for the higher education exception code 08, and also refer to the Benz v Commissioner Case.
2017-12-29 02:19, By: Alan S, IP: [220.127.116.11]