Taking a lump sum after starting 72T withdrawals

L1: Taking a lump sum after starting 72T withdrawals
I am a 53 year old retired person who began taking monthly 72T distributions in October, 2010. What would be the penalty, if I needed a lump sum distribution, of say $10,000,and still continue to takemy monthly withdrawals of $800?
2011-12-19 21:24, By: Lodibob23p, IP: [99.128.62.39]

L2: Taking a lump sum after starting 72T withdrawals
You would pay a penalty of 10% on all previous withdrawals plus interest on the 2010 penalties. As the same time your SEPP plan would end. To continue future withdrawals, you would have to establish a new SEPP based on your current age, interest rates and
account balance.
You might be better off trying to borrow the $10,000 – it might be less costly.
2011-12-19 21:41, By: Gfw, IP: [205.178.73.77]

L3: Taking a lump sum after starting 72T withdrawals
For anyone else thinking about setting up a SEPP, this is why they always recommend splitting your IRA into two seperate IRA’s. You can use one of the IRA’s for the SEPP and then if you need to take an unexpected lump sum, you can take it from the other
IRA without busting your SEPP.
(I’ve been following this board for a few years and it is still suprising the number of times this comes up.)
2011-12-20 00:34, By: Red Baron, IP: [173.141.119.7]

L4: Taking a lump sum after starting 72T withdrawals
It is also an example that it is often helpful to take out the full annual amount in the first year and save it for an emergency need.
In this case, 2,400 was taken out in the last 3 months of 2010 and a full annual distribution of 9,600 would have provided 7,200 of funds for later needs. You could equate the 7,200 as an insurance policy against unexpected future
needs that would bust the plan.
But for an extra need of 10,000 it would not be enough, although it would be easier toborrow 2,800 than 10,000. It looks like this plan would not survive another 6 years anyway unless there was another source of funds forthcoming
that would take pressure off the SEPP distributions.
2011-12-20 04:05, By: Alan S., IP: [24.116.66.40]

L5: Taking a lump sum after starting 72T withdrawals
Assuming a 25% tax bracket, you would have to take out $ 13,333 in order to have $ 10,000 left after federal taxes ( and take out even more for state income taxes, unless you live in PA which doesn’t tax retirement distributions, usually).
2011-12-20 05:21, By: dlzallestaxes, IP: [96.227.217.194]

L4: Taking a lump sum after starting 72T withdrawals
Be careful of terms like “always”, as there is plenty of situation variety out there. If a person has significant financial assets outside of their retirement plans, then the necessity of splitting their IRA to cover unexpected expenses declines. It is
a good general rule, though, and anyone setting up a SEPP plan should consider whether or not it applies to their situation.
2011-12-25 05:22, By: Ed_B, IP: [71.236.204.181]

L5: Taking a lump sum after starting 72T withdrawals
You are correct. I should have said that it is “strongly recommended” if they don’t have other funds available to use as a backup or emergency situation.
2011-12-25 13:13, By: Red Baron, IP: [173.141.119.7]