So, you’ve decided that you’d like to begin taking distributions from your IRA funds – and you’re under age 59½, so you need to structure your distributions as a Series of Substantially Equal Periodic Payments (SOSEPP). (For more background information on the SOSEPP, see this article.) It is important to do this right, because once [...]
Posts under ‘72t’
Sam, You Made The Pants Too Short!
With apologies to the writer and performers of the original “Sam, You Made The Pants Too Long!”… This article is about what happens when your IRA declines substantially in value and you’ve put a 72t Series Of Substantially Equal Periodic Payments plan (SOSEPP) into play – and the decline in value has brought your [...]
The “Default” Default Distribution Period
We’ve talked about all kinds of issues surrounding distribution periods, but there’s at least one more facet of distribution periods that we have not addressed just yet. What happens when there is no designated beneficiary for the IRA account? More specifically, what is the longest distribution period that heirs are allowed to stretch an IRA [...]
Are 72t Payments Also Exempted in 2009?
This is a follow-up to my original post regarding the RMD Holiday for 2009.
If you’re taking a Series of Substantially Equal Periodic Payments (SOSEPP), also known as 72t payments, from an IRA or other plan, you are not allowed to “skip” a payment for 2009. The reasoning behind this is that your 72t payments are [...]
19 Ways to Withdraw IRA Funds Without Penalty
We’ve covered a lot of ground on how you can get at your IRA funds in this blog, but here is an all-inclusive list of the ways I’ve come up with to withdraw your funds without triggering the 10% penalty. This list is for Traditional IRAs only.
It is key to note that, although these exceptions [...]
Higher Education Expenses Paid From A Qualified Plan
Another way to pull funds from an IRA or a qualified retirement plan (401(k), 403(b), 457, etc.) without having to pay the 10% penalty is to use those funds for Qualified Higher Education Expenses (QHEE). This comes up quite often, as parents are faced with the issues surrounding the dueling requirements of retirement saving and [...]
Separation From Service On or After Age 55
Did you realize that there is a provision within the Internal Revenue Code that allows you to start taking distributions from your 401(k) plan before you reach age 59½? This little-known section of the code, §72(t)(2)(A)(v), can be a real dandy if you happen to fit the requirements.
Note: although we will refer to the 401(k) [...]
Traditional IRA v. Roth IRA – Compare & Contrast
What’s the difference between the two types of IRAs? And what is similar?
You probably know a little bit about this subject – like one IRA is deductible on your income taxes, and the other one has some kind of tax benefit… but the differences are hard to understand, and can be even harder to explain! [...]
Penalties for Changing SOSEPP
So – you’ve begun your Series of Substantially Equal Periodic Payments (SOSEPP) from your IRA to satisfy your §72(t) requirement. Allofasudden, something happens that causes you to make a change to your payment – either purposely or by accident. What happens?
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Well – first of all, we must understand the timeline associated with an SOSEPP: once begun (notwithstanding [...]
SOSEPP & How a QDRO Affects It
In addition to the 72(t) exception available for folks with a QDRO (see this post), there is also the question of how a QDRO impacts an established Series of Substantially Equal Periodic Payments (SOSEPP) – which, as we know, once established can only be changed one time.
Although not definitive, below are summaries of three Private Letter [...]
