Discontinuing 72(t)
A gentleman has come to me with a question regarding 72(t) distributions.
He is in his fifth year of distributions and just turned 59 1/2. After he’s taken his last distribution, does he have to wait until the end of the calendar year to take any further distributions? Or can he take any amount since he’s turned 59 1/2?
Thank you!
Kirk
Permalink Submitted by Alan Spross on Mon, 2010-06-07 20:16
Once the modification date for his plan has been reached, he can take out as much as he wants or nothing. The key is to make sure he knows what his modification date is. It is the later of the date he turns 59.5 or 5 years from the date of his first 72t distribution. Therefore, he may have hit 59.5 but still not reached his modification date.
It sounds like 2010 is his final “stub year” for the plan. While he can do what he wants after the modification date, he has various options PRIOR to the modification date in his last stub year. If his distributions are monthly, he can take his last distribution in the month prior to his modification date or he can take the full annual amount out prior to the modification date.