When Does the 72T have to Stop?
L1: When Does the 72T have to Stop?If a person starts a 72T when they are 56 years old and now they are 63. They have passed the larger of the two time frames, but can they still take out the 72T payments? Thanks.2009-07-30 21:34, By: Jenn, IP: [184.108.40.206]
L2: When Does the 72T have to Stop?Yes, and no. They can continue to take out the same amount, but they can also stop taking any distributions until 70 1/2, or they can take the entire balance, or anything between -0- and 100% of the balance.
Technically the 72T terminated after 60 months, or 2 years ago !!!2009-07-30 23:17, By: dlzallestaxes, IP: [220.127.116.11]
L3: When Does the 72T have to Stop?Since your 72(t) plan is “technically completed,” check your IRS Form 1099-R for distribution coding. Most custodians will automatically change from either Code 2 or Code 1 for distributions prior to your age 59 1/2 to Code 7 for all distributions after your age 59 1/2, eventhough you have not completed the 5-year requirement. But each custodian is different so you need to check.
I found one custodian, Putnam Funds, that will continue coding for “pre-59 1/2” distributions until you tell them to change the coding. My client was about to begin RMD distributions due to age 70 1/2 and they were still issuing Code 2 from his SEPP Plan days. Putnam is the only fund family that I have found with this procedure.
Jim2009-07-31 13:24, By: Jim, IP: [18.104.22.168]
L4: When Does the 72T have to Stop?Jim,
That’s good, because Putnam is not in compliance with the 1099R Instructions. The Inst. indicate that Code 2 is never used for distributions after 59.5.
For a continuing 72t plan in compliance the # should be 7, and if not in compliance, a 1. Or perhaps they have the wrong DOB on file for him?2009-07-31 19:56, By: Alan S., IP: [22.214.171.124]
L5: When Does the 72T have to Stop?Good morning Alan. I guess Putnam is in “non-compliance” with Form 1099-R instructions.
They have the correct DOB for my client. When I asked them why they were still issuing “Code 2” for this client they told me it was their policy not to make any changes until “requested,” either by the client or their rep … me. So I requested they recode all 2009 distributions to Code 7 and that has now been changed. At the appropriate time we’ll take care of the age 70.5 RMD’s.
Jim2009-08-03 14:50, By: Jim, IP: [126.96.36.199]