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 [...]
Posts under ‘72t’
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? . Well – first of all, we must understand the timeline associated with an SOSEPP: once [...]
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 [...]
401(k) & Qualified Domestic Relations Orders (QDRO)
An exception to the 10% penalty on distributions from a qualified plan (but not an IRA) is when the distribution is pursuant to the imposition of a Qualified Domestic Relations Order, or QDRO (cue-DRO). A QDRO is often put into place as part of a divorce settlement, especially when one spouse has a considerably larger retirement plan balance than [...]
SOSEPP – Fixed Annuitization method
When calculating your Series of Substantially Equal Periodic Payments (SOSEPP), provided for under §72(t)(2)(A)(iv) of the Internal Revenue Code, one of your choices is the Fixed Annuitization method. Calculating your annual payment under this method requires you to have the balance of your IRA account and an annuity factor, which is found in Appendix B [...]
SOSEPP – Fixed Amortization Method
When calculating your Series of Substantially Equal Periodic Payments (SOSEPP), provided for under §72(t)(2)(A)(iv) of the Internal Revenue Code, one of your choices is the Fixed Amorization method. Calculating your annual payment under this method requires you to have the balance of your IRA account, from which you then create an amortization schedule over a [...]
SOSEPP – RMD Method
The Required Minimum Distribution method for calculating your Series of Substantially Equal Periodic Payments (under §72(t)(2)(A)(iv)) calculates the specific amount that you must withdraw from your IRA (or other retirement plan) each year, based upon your account balance at the end of the previous year, divided by the life expectency factor from either the Single [...]
Changing Your SOSEPP – Once, just once
The IRS allows you to change your Series of Substantially Equal Periodic Payments (SOSEPP) allowed under §72(t)(2)(A)(iv) – one time, and only one time. And then, you’re only allowed to change your method from either the fixed annuitization method or the fixed amortization method to the Required Minimum Distribution method. This is the only exception [...]
Early Withdrawal of an IRA – Series of Substantially Equal Periodic Payments
This particular section of the Internal Revenue Code – specifically §72(t)(2)(A)(iv) – is the most famous of the 72(t) provisions. This is mostly due to the fact that it seems to be the ultimate answer to the age-old question “How can I take money out of my IRA without penalty?” While it’s true [...]
Withdrawals from an IRA – death, disability, and 59 1/2
Three of the most common ways that you can withdraw funds from your IRA without penalty are – reaching age 59 1/2, death, and disability. When you reach age 59 1/2, you can withdraw any amount of your IRA (or other deferred account) without penalty, for any reason. The only thing you have to remember [...]
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