Skipped 72t payments and Recovery Act of 2009

L1: Skipped 72t payments and Recovery Act of 2009I have a question concerning the Recovery Act of 2009 concerning withdrawals from an IRA. I am under 50, and have a traditional IRA. I started SEPP’s for a 72t withdrawal program a few years ago. My ira admin normally sends monthly payments. The balance has gone down considerably, and I have cancelled about 6 of those monthly payments, when the markets, and my balance were very low. I know I would normally have to make those up before end of year. Can I skip those payments without penalty under the Recovery Act of 2009 ? 2009-12-06 19:31, By: RetiredRealtor, IP: [68.202.100.204]
L2: Skipped 72t payments and Recovery Act of 2009Short answer NO! The Recovery Act of 2009 hadno impact on SEPP plans – you must continue to take any scheduled distributions. If not already using the Minimum distribution [MD] alternative, you could make the switch if you have taken out less than the annual amount generated by the MD method.2009-12-06 19:45, By: Gfw, IP: [216.80.125.206]

L2: Skipped 72t payments and Recovery Act of 2009Man… is this ever a classicrecommendation for ASKING first and doing second… instead of the reverse. :-(Gfw is correct. ThisSEPP is busted UNLESS you either take make-up distributions that get you up to the amount your SEPP requires you to distribute for 2009 OR youmake the 1-time switch to the RMD method AND you have not taken out more for 2009 than the RMD method allows. If you have taken more than the RMD method allows, then that possibility is unavailable to you and taking the full distribution for 2009 is all that remains to avoid busting the SEPP and oweing the penalty tax on all previous distributions.It is very important that you find out immediately whether this is a viable option, as time is running out for you to take corrective action.In most cases, people with diminishing IRA balances will switch to the RMD method early in the year and perhaps as late as mid-year. The fact that you have not taken 6 of your monthly payments means that you have only taken about 1/2 of the amount you should have taken for 2009. That may or may not be enough to get you below the amount mandated by the RMD method. If it is, youshould be able tosalvage this situation.The only bright spot in this situation is that the IRS no longer deems a SEPP to be busted because it distributes all of its funds prior to its official end date. Ifan IRA with an active SEPP runs out of money,it simply ends and no penalty tax is assessed.2009-12-06 20:17, By: Ed_B, IP: [71.236.183.224]

L3: Skipped 72t payments and Recovery Act of 2009To clarify a part of Ed B’s advice, if you plug in your 12/31/2008 IRA ending balance and your age in 2009 into the SEPP calculator on this site,and the RMD annual withdrawal amount for 2009 is less than what you have taken so far in 2009, you need to take the balance (before the end of DEC 2009) to get you to that exact RMD annual total for 2009, and then continue the RMD method for succeeding years, with new a withdrawal calculation done at beginning of each year. KEN2009-12-07 19:31, By: Ken, IP: [71.192.120.143]

L4: Skipped 72t payments and Recovery Act of 2009If the 6 payments already made are only slightly over the MD calculation for the year, you can roll part of any payment you received in the last 60 days back to the IRA to bring the distributed amount equal to the MD method calculation.Of course, to to that you must still have your one permitted rollover per IRA available and you cannot do another one for 12 months. Also, you can only roll back all or part of ONE distribution, not more than one. Along these same lines, when you indicated that you “cancelled” the other distributions, I hope that means that you prevented those distributions from being issued.2009-12-08 01:09, By: Alan S., IP: [24.116.165.60]

L3: Skipped 72t payments and Recovery Act of 2009Ed, Thanks for the condescending/sarcastic remarks.”Man… is this ever a classicrecommendation for ASKING first and doing second… instead of the reverse. 🙁 “I was hoping for more professional replies from a site like this. I guess I came to the wrong place. Obviously I am writing now as there is still time to act. It only takes 3 days for my IRA admin to process and record a payment. I intentionally delayed some payments before there even was a “Recovery Act of 2009”, knowing I would have to make them up. I just wanted to see if that perhaps meant Ino longer had to. Thanks to the rest of you for trying but replies like Ed’s makes me question the value and professionalism of all replies. I think I will look for a site a little more mature in nature.
Thank YouDon2009-12-10 15:40, By: Retired Realtor, IP: [66.195.245.3]

L4: Skipped 72t payments and Recovery Act of 2009Don,GFW owns this site and has a vast knowledge, and Alan S is one of the most knowledgeable people on this topic, who posts on many sites. I am just a retiree with two active 72t plans, who has done a lot of reading on this site and others in the past 5 years. This is all done for free by all of us, so I guess you get what you pay for. I am not sure what you meant by thanking us for “trying”. The answer to your problem will not get any better than what you have heard on this site. JMHO KEN 2009-12-11 04:39, By: Ken, IP: [71.192.120.143]

L5: Skipped 72t payments and Recovery Act of 2009Ken, I appreciate you pointing out, “who’s who”. I am not a regular on this forum and have no idea who the experts are. Since Ed was among the first and longest replies, it was a logical assumption he was the authority or expert on this board. His opening remark just p*ssed me off so everything I read after, by him or others, was taken more with a grain of salt than as absolute best advice. Sometimes “what you are screams so loud, I cannot hear what you say”. Since nobody elseseemed to find his remark out of line, it kind of made the whole forum appearlike a “good ole boy’s club” taking pot shots at the new guy. I don’t need that and did not ask for it. I am an expert in 3 different fields relating to my former and current careers, (one not being taxes). When I want to be taken seriously by someone I am advising, I rarely open with an insult. Thank you for your clarification and advice.Don2009-12-11 13:08, By: RetiredRealtor, IP: [68.202.100.204]