No tax or penalty… or is there?
L1: No tax or penalty… or is there?Hello:Kudos Mr. Weis for a wonderful resource. I am confused however, regarding the matter of running out of funds, as the following comments seem contradictory to me. Thanks in advance.From:
72(t), Final Thoughts
out of funds to make the required plan distribution would be a change in method
possibly triggering both penalty taxes and retroactive interest – all at a
point when the fund is gone!
72(t) Frequently Asked Questions [FAQ]
Q. What if I run out of money?
A. Note, 2002-62 allows plans that run out of funds to NOT incur the 10%
penalty tax. Rev. Ruling 2002-62, 2.03(a) states… “If, as a result of
following an acceptable method of determining substantially equal periodic
payments, an individual”s assets in an individual account plan or an IRA are
exhausted, the individual will not be subject to additional income tax under
72(t)(1) as a result of not receiving substantially equal periodic payments and
the resulting cessation of payments will not be treated as a modification of
the series of payments.”2008-07-25 17:22, By: Wilbur, IP: [22.214.171.124]
L2: No tax or penalty… or is there?Siince Rev.Rul. 2002-62,there is no penalty to run out of funds.
The page, Final Thoughts” has been corrected. I must have missed it.2008-07-25 17:37, By: Gfw, IP: [126.96.36.199]