72t distributions…
we have a client that is on 72t distributions & converted to the RMD calculations…client’s 72t will end 6/2010. My questions is….client’s annual 72t distrib for 2010 is $6703.37. She is receiving this amount on a monthly basis, do we need to make sure the client takes the full distribution of $6703.37 by 6/2010 or can she continue to make her monthly distrib of $558.61 and end her distributions after the June one takes place and not worry that she didn’t satisfy the full amount for 2010?
Wendy
Permalink Submitted by Alan Spross on Fri, 2010-01-22 18:09
Wendy,
If the plan modification date is in June, 5 monthly distributions of 558.61 by the end of May will complete the plan. It is always wise to verify the current year calculation since the RMD method requires an entirely new calculation for each new calendar year.
Also, be sure that the client has taken the dollar equivalent of at least 60 monthly distributions since the plan started. 2010 is the final “stub year” and there are other options available, but the pro rated annual distribution is the safest. Since the plan terminates in June, there should only be 5 months taken out under the pro rated option.
After the modification date, client is free to distribute nothing or any amount they wish.