Prematurely stopping 72t

L1: Prematurely stopping 72tI started a 72t in March, 2005. It uses the amortization calculation method, is distributed annually and uses the calendar year measuring period.
I will turn 59 in December, 2005. Starting ASAP, I’d like to take distributions larger than the agreed SEPP distribution and would like to know the associated penalties.
When talking with my financial advisor (not a tax accountant), he and his team say that it’s clear I will owe the 10% penalty on the distribution I took this year. It appears that starting in 2007 there are no more penalties since I will be over 59.5. The grey area seems to be the year I “break” the 72t “contract.” He says it’s possible I will owe the 10% penalty on the total amount of whatever distributions I take in both 2005 and 2006.
Finally, I’d like to know if it wouldbe better to take another distribution in 2005 or wait until 2006. If the “break” year indeed makes a difference, perhaps it would be better to take a small amount this year and then wait until 2006 (when I turn 59.5) to take the rest of the money I need.
I plan to consult an accountant but would like to (as you suggest on your website) become more educated before I do. Thanks so much for making your website available!
Vicki
PS: I was having problems searching the forum yesterday (per my e-mail). I tried again after I saw your reply e-mail andeverything seems to be fine now.2005-11-08 16:03, By: Vicki, IP: [68.233.81.113]

L2: Prematurely stopping 72tHello Vicki:
Your financial advisor is correct; you will owe the 10% surtax on your May, 2005 distribution. I would not take anymore distributions if at all possible & simply wait until May xx, 2006 when you will turn 59 1/2. At that date, any and all distributions will be surtax free.
Thebadger
wjstecker@wispertel.net
2005-11-08 19:00, By: TheBadger, IP: [66.250.23.21]