Changing 72(t) distributions
Client began taking 72(t) distributions in 2007. The account has fallen in value in 2008. Can the amount of the 72(t) ditribution be reduced based on the regulation passed following the tech crash which allows a one time modification to distributions based on the current account value?
Permalink Submitted by Alan Spross on Thu, 2008-12-18 17:31
Yes, a one time switch to the RMD method is permitted, although coupled with a reduced 12/31/08 value may lower the indicated distribution below what client needs for expenses. If that is turn forces extra distributions, the plan is busted.
This change should be made effective with a calendar year, so the timing is good. Choice of mortality tables is not restricted by the table client used with the original calculation.
The term of the original plan is not changed as a result of the one time switch to RMD.