Five year rule
L1: Five year ruleWhen considering the “Five Year Rule”, are we to think in terms of five CALENDAR years, or five years worth of substantially equal payments?
Lets say a person age 56 is taking annual withdrawals under 72t with the first payment taking place on 7/1/2007. They take annual payments on 7/1 in 2008, 2009, and 2010. When the fifth annual payment is taken on 7/1/2011, have they satisfied their obligation under 72t, even though it has been only four CALENDAR years sicne the initial payment?2011-04-04 19:11, By: bcs, IP: [22.214.171.124]
L2: Five year ruleFrom the exact date of the first distribution, 5 Years = 365 days times 5 years plus 2 days to account for leap years.Or, you can use our First ModificationDate calculator… http://72t.net/72t/Calculator/First/Modification/DateLook in the 72t FAQ for the following Q. Assuming the 5-Year rule, when can payments be modified? 2011-04-04 19:41, By: Gfw, IP: [126.96.36.199]
L3: Five year rulei had missed that. excellent follow up, thank you.2011-04-04 20:05, By: bcs, IP: [188.8.131.52]
L4: Five year ruleNote that the modification date is the date your plan ends.But you have options in 2012, your final stub year. Since 60 monthly payments or the dollar equivalent thereof have been taken at the end of 2012, there are several options available in 2012 prior to the mod date that still satisfy 72t requirements:1) Take nothing2) Take out 50% of your annual amount, ie 6 months worth prior to the mod date3) Take out the full annual amount prior to the mod dateWhat you cannot do in 2012 is to take a distribution that is different than the above 3 options prior to the mod date. You can do whatever you want after the mod date plus safety factor recommended by gfw.I assumed age 59.5 was reached prior to the 5 year mod date.2011-04-04 23:02, By: Alan S., IP: [184.108.40.206]
L5: Five year ruleI think Alan meant to say in prior post”…Since 60 monthly payments or the dollar equivalent thereof have been taken at the end of 2011…. Ken2011-04-08 09:39, By: Ken, IP: [220.127.116.11]
L6: Five year ruleYep Ken, that is what I meant, but not what I typed. Good catch.2011-04-08 18:49, By: Alan S., IP: [18.104.22.168]