taking extra money from Ira 72t

L1: taking extra money from Ira 72tWe have been set up on a 72T plan since 2001. Age 59 1/2 will be reached in December 2005. We would like to withdraw an additional 40,000.00 from the Ira for a downpayment on a second home. Is this possible and what will the penalties be?2005-02-07 07:05, By: kt4hair, IP: [68.223.20.88]
L2: taking extra money from Ira 72tPlease provide a little more information. What is your date of birth and what was the date of the first payment?
If you fail to satisfy the 5-year/age 59.5 rule, the penalty would be a recapture of the 10% penalty for all previous SEPP diistributionsplus interest on the past due penalties.2005-02-07 07:42, By: Gfw, IP: [172.16.7.101]

L2: taking extra money from Ira 72tMay I suggest going to the front of this web site and run the calculator which tells the last date for distribution of the 72(t). You have to go a full 5 years based on days and the calculator will give you this information.
When you can satisfy both the 5-year and age 59 1/2 requirements, you can take the full $40k out without the 10% penalty. If you wanted to take money from an IRA as a ‘first-time home buyer’ without penalty, then read IRS Pub 590 for these details. I think the limit on the withdrawal is $10k which is about $30k short of what you need.
Since you are in a 72(t) and from what information you have given us, I suspect that you are going to need the money before you satisfy the 5-year and age requirements. This situation is one we have been looking for someone to ‘step up to the plate’ and do a PLR for an answer. TheBadger can comment more on this aspect but in short it is an expensive proposition for a small return.
Try an alternate source for your downpayment. This might be simpler and cheaper.
Jim2005-02-07 08:57, By: Jim, IP: [70.184.1.35]

L2: taking extra money from Ira 72tWhile you could request a PLR, if you are inside the 5-year/age 59.5 limits, the answer wouldn’t be positive as the IRS really cannot change the terms of the code and 72(t) is very clear as to what happens if the plan is “Busted”.
I agree with Jim, look for another source for the $40,000 if you haven’t met the 5-year/age 59.5 limit. 2005-02-07 11:31, By: Gfw, IP: [172.16.1.71]

L2: taking extra money from Ira 72tWhat are the odds that the IRS would catch an error like this? I don’t think it would trigger an audit.2005-02-12 07:52, By: daddy0, IP: [24.44.124.155]