Multiple 72T Accounts

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L1: Multiple 72T Accounts
I havethree separateIRA accounts, and each has a 72T associated with it. Each has its own account number. I have had the 72T accounts for 4 years. All the accounts are managed by the same Investment company. I am in a situation where I may need additional
money, so I may have to take extra money out of one account, andbreakequal payment rules. I realize I would be subject to the 10% penalty for all amounts withdrawn over the last 4 years out of that account.

My questions is this. Would the 10% penalties only apply to the one account I am breaking, or would the penalties be applies to all 3 of my 72T accounts?
2011-11-23 03:13, By: Neil, IP: []

L2: Multiple 72T Accounts
If each of the IRA accounts had a different SEPP 72-T plan, then only that 1 account/plan would be subject to the 10% penalty. However, if you had 3 different accounts as part of the same SINGLE SEPP 72-T PLAN universe, then you would have only 1 plan, and
all of the cumulative payments from all 3 plans would be subject to the 10% penalty.
Is it possible for you to come under one of the other exceptions to the 10% penalty for the extra money you need now ?
What is your DOB ? (i.e. when will you be 59 1/2 ?)
2011-11-23 05:46, By: dlzallestaxes, IP: []

L3: Multiple 72T Accounts
Dlz is exactly right. The real question is do you have three plans or one plan with three accounts. Questions…
Did you start the different plans on three different dates?
When started, did you use the balance in each of the accounts to determine the initial annual distribution amount for each of the 3 accounts?
Did you take the calculated annual distribution for each of the three accounts from each of the three accounts?
2011-11-23 10:54, By: Gfw, IP: []

L4: Multiple 72T Accounts
Gfw: I am checking with my financial advisors, but here is my understanding:
1. ALl three accounts were set up on teh same date.
2. I used the balance in account 1 to determine the initial annual sitribution in account 1, the balance in account 2 to determine the annual distribution for accoutn 2, etc.
3. I took the calculated annual distribution for account 1 only from account 1; for account 2 only from account 2, etc.
2011-11-23 15:28, By: Neil, IP: []

L3: Multiple 72T Accounts
Thanks for the reply. That was very helpful. Iturned 59 1/2 as of Sep 2011, but I didn’t start my 72-T until Sept 2007, so my 5 years is up on Sept 2012.
I am currently unemployed, but just started running a small business that isn’t making much money yet, so looking at needing some extra living expenses…
Thanks for any insights…
2011-11-23 15:13, By: Neil, IP: []

L4: Multiple 72T Accounts
You may qualify for the exception for health insurance premiums for the unemployed.
I would max out credit cards or home equity loans/lines of creditfor the next year, until Oct 2012. It will be cheaper than the 10% penalty on 4 years of distributions.
2011-11-23 15:17, By: dlzallestaxes, IP: []

L4: Multiple 72T Accounts
Please answer some of the questions and maybe someone can offer some insight. At this point you haven’t provided any details so you can really expect much assistance or insight.
2011-11-23 15:18, By: Gfw, IP: []

L5: Multiple 72T Accounts
You are ok.
If I had been your “financial advisor”, I would never have set up all 3 SEPP 72-T plans to start at the same time. I would have at least started them in 3 separate months to minimize the confusion that IRS might have that they were 3 separate plans.
Also, by starting them at different times, you could have had 3 different prorated amounts for the 1st calendar year, and by coordinating the plans with your needs for the first 2 calendar years, you could have set the amount for 1 of the plans to provide
an annual distribution in the first calendar year to cover your needs for the first 2 calendar years, and minimize the distributions in the first calendar year by waiting until Nov & Dec to start them.
Apparently your financial advisor did not understand this nuance to SEPP 72-T plans. He was only familiar with the prorated monthly aspect.
2011-11-23 15:39, By: dlzallestaxes, IP: []

L5: Multiple 72T Accounts
Neil…sorry for my last post, you answered the questions and I missed it. Take Dlz’s advice and get the funds from some other source if possible.
Even if you eventually determine that you have three different plans, convincing the IRS that you have three plans (and it sounds like they are 100% identical) and not one plan may not be easy.
2011-11-23 16:00, By: Gfw, IP: []

L6: Multiple 72T Accounts
You should be able to eventually convince the IRS that you only busted one plan if you have documentation for the transactions you described. While you did not indicate the differences in initial amounts for each plan, if they
are different then you have flexibility to decide which plan to bust, if you have to bust one. You will only owe the retroactive penalty on distributions you took prior to age 59.5, and the plan you bust will be deemed to have ended on the date you bust it.
2011-11-23 20:24, By: Alan S., IP: []