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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
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Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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I have a question about my IRA, specifically about a 72-T account

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I have a question about my IRA, specifically about a 72-T account I set up. This is a quote from the IRS website and I want to make sure I am interpreting it correctly: "When do I fulfill my obligation to take substantially equal periodic payments?

The substantially equal period payments must generally continue for at least five full years, or if later, until age 59 ½. For example, if you began taking payments at age 56 on December 1, 2006, you may not take a different distribution or alter the amount of the payment until December 1, 2011, even though your fifth payment was taken on December 1, 2010.

If you begin taking substantially equal periodic payments on December 1, 2005, and you turn 59 ½ on July 1, 2011, you may not take a different distribution or alter the amount of the payment until July 1, 2011. "

(If it’s relevant, I was 57 years old on 01-09-2010; I turned 59 and 1/2 in July 2012.)

This is a history of the distributions from the 72-T account and my interpretation of what that means for fulfilling my obligation to take substantially equal periodic payments:

4-10-10 first equal period payment received and subsequent four payments authorized to be made on January 2 of each year.
1 year completed = 4-10-11 (second pymt rec’d 1-2-2011)
2 yrs completed = 4-10-12 (third pymt rec’d 1-2-2012)
3 yrs completed = 4-10-13 (fourth pymt rec’d 1-2-2013)
4 yrs completed = 4-10-14 (fifth pymt to be received 1-2-2014)
5 yrs completed = 4-10-15 even though last of the five years of payments was received about January 2, 2014. So the earliest I can take another distribution of any amount whatsoever after the 5th payment of 1-2-2014 is on 4-10-2015? Is that correct?
Submitted: 9 months ago.
Category: Finance
Expert:  Megan C replied 9 months ago.

Megan C :

Thank you for your question, and thanks for using JustAnswer.com. How are you today?

Megan C :

How are you today?

Megan C :

You are correct - you have to have the 72(t) schedule active for at least 5 years before you can take other distributions from your IRA account.

Megan C :

So, if your start year is 2010, you would have to go until 2015 to make the 5 year mark.

Megan C :

That means that it would be April 11, 2015 before you could take an additional withdrawal from your account. If you did before then, it could negate your 72(t) arrangement.

Megan C :

You can read FAQs regarding the 72(t) election on the IRS website, available HERE.

Megan C :

Your question is covered at the very last question all the way at the bottom of the page.

Megan C :

Do you have any further questions about this matter?

Megan C :

I see you haven't stepped in our chat, I will go ahead and switch to Q&A mode. If you have the answer you need, please rate as "excellent" so that I may receive credit for assisting you today

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12471
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and other Finance Specialists are ready to help you
Expert:  Megan C replied 9 months ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

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If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Megan C replied 9 months ago.
Keith,

I see you were unable to join our chat. Please find my answer above. If you have any further questions, please don't hesitate to ask. Otherwise, please rate as "excellent" so that I may receive credit for assisting you today.

Thanks again for being a valued JustAnswer.com customer.

Megan
Customer: replied 9 months ago.


Thanks for confirming that my interpretation of the IRS example was correct. I was not 100% sure and the stakes are too high not to get confirmation from a professional. Your help was much appreciated. I'll be sure to keep justanswer.com in mind if I need more help in the future.

Expert:  Megan C replied 9 months ago.
Keith,

Glad I could be of assistance. If you ever need me at any time, please don't hesitate to post a question "For Megan C" and I will assist.

Thanks!

Megan

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