Early withdraw and SEPP
L1: Early withdraw and SEPPI retired from the federal government in 3/09. I did a direct rollover of TSP monies to a IRA. In 6/09, I took some funds out witholding enough to pay the taxes and 10% penalty. I am planning on setting upa 72t dis. on the remaining amount in 7/09. Do you see any problems with the IRS.2009-07-01 18:17, By: Gator, IP: [220.127.116.11]
L2: Early withdraw and SEPPPlease give more specifics, such as your age/date of birth, amount in your plan, etc.2009-07-01 18:56, By: dlzallestaxes, IP: [18.104.22.168]
L3: Early withdraw and SEPPI am 50 yr. old, birthdate 3/7/59. Original amount rollovered was 380,000. I have withdrwn 130,000. Would I be safer to wait until 2010 to start the 72t.2009-07-01 19:08, By: Gator, IP: [22.214.171.124]
L4: Early withdraw and SEPPYou can start the plan anytime now or in 2010, but since you took such a large percentage (nearly 1/3) , there is no way you will be able to incorporate that into a valid plan starting with that particular distribution.
Not enough is known about your situation, but the basic premise is not to start a 72t plan that will not be sufficient to last until 59.5, unless you have other assets to start another plan or allow the present plan to just be a part of your income. Otherwise, you will just bust the plan down the road an owe retroactive taxes and interest. I assume you needed to large distribution for something and those funds have already been spent, but if not, and you are still within 60 days, you could roll them back (or some of them) and start over. As it is, the distribution is taxable and subject to early distribution penalty of 10%.
Certain expenses such as medical or educational qualify for their own penalty waiver if you used the funds for those purposes.
2009-07-02 00:30, By: Alan S., IP: [126.96.36.199]