misguided

L1: misguidedHelp—-I have a client that intially set up his 72t incorrectly (not at my firm). He is now suffering what everyone else in this situation is (not enough money). How can we, legaly, either recalculate or change the plan without incurring any penalties. Or is there not a chance without penalty. I would appreciate any advice. Thanks2002-07-29 08:54, By: cyron, IP: [127.0.0.1]
L2: misguidedHello cyron:The situation you describe is called “premature account exhaustion”; e.g. the corpus of the IRA runs out of money before the beneficiary reaches age 59 1/2 or 5 years; whichever is later.My interpretation; as well as most others, is that this will constitute a “modification” under IRC 72(t)(4) thus invoking the 10% surtax plus interest as would any other unilateral steps taken by your cleint to recalculate or make other plan changes.By happenstance, I logged on and did some searches over the weekend and the IRS has issued nothing on this subject, thus far. Therefore, the only remedy of which I am aware is to file for a PLR on behalf of your client. There are several cogent arguments to be made for the benefit of the client; however, we are admittedly in a grey area of the law where there is effectively no law.TheBadgerwjstecker@wispertel.net2002-07-29 09:44, By: TheBadger, IP: [127.0.0.1]