Restarting 72t Penalty
If 72t has already been started and it is stopped at age 52-53, what would be the tax implications of restarting 72t at age 56-57, would the second round of 72T distributions be subject to an early withdrawal penalty as well?
If 72t has already been started and it is stopped at age 52-53, what would be the tax implications of restarting 72t at age 56-57, would the second round of 72T distributions be subject to an early withdrawal penalty as well?
Permalink Submitted by Al Fry on Mon, 2007-12-17 16:56
No, not if calulated and operated correctly. Al
Permalink Submitted by Alan Spross on Mon, 2007-12-17 18:10
Remember that you can make a one time switch to the RMD method on a current SEPP that will typically produce a substantial reduction in the required annual distribution. This may be an option to discontinuing the plan and incurring the retroactive penalty and interest.
Any additional or later SEPP plan is not affected in any way by a prior plan as Al indicated. If you start a plan at 57, it must continue for 5 years, however, if busted after age 59.5, the penalty only applies to the distributions that were made prior to 59.5. That somewhat reduces the downside of starting a plan only a couple years prior to 59.5.