End of 72T Distribution

You are here:
< Back

L1: End of 72T DistributionPlease double check me on this…
A client took her first 72T distribution in Dec. 2004. It was enough to cover all of the year 2004.
She has since taken distributions monthly and has attained age 59-1/2.
The custodian has informed her that the 72T requirements will be fulfilled as of Jan 2009 in that 5 years of distributions have been taken.My read is that she must wait until Dec. 2009 or 5 years from the first dollars coming out of the IRA regardless of the “time period” it represents.
Two questions:1 – who is correct?2 – if the custodian will warrant the penalty has run, what”s exposure2008-05-27 10:18, By: Mobey, IP: []

L2: End of 72T DistributionThe plan must last until the later of age 59.5 or 5 years from the date of the first distribution – Check out the last payment date calculator in the menu above. 5 years = 365 daystimes 5 yearsplus 2 days to be safe.
The exposure is simple – 10% penalty on all distributions plus interest on the past due penalties. Regardless of what the custodian does, you may also have a certain amount of exposure – the custodianfor being wrong (and you really need it in writing signed by someone other than a clerk)and you for not providing a correction to the information that they gave her if she is your client.

If she has taken 5 full annual distributions, she may not need to take any more, but there can be no changes until the end of the plan.2008-05-27 10:30, By: Gfw, IP: []

L2: End of 72T DistributionYou were the one that was correct. The custodian may have left out the word “Withdrawal” in the phrase “72T WITHDRAWAL requirements will be fulfilled” but they did not actually say she could start taking other money amountsout during 2009, so be careful–it”s not worth the gamble. As Gordon stated, the 72t clock stops ticking for her5 years (and a few days) from date of her first payment. Ken2008-05-27 20:51, By: Ken, IP: []