72(t) end – annual distributions
My client has been taking 72(t) distributions for 8-10 years. He takes the distribution as 1 lump each year, usually in the fall. He turns 59.5 in February, 2009.
Question – Will he have to take a distribution in 2009?
Permalink Submitted by Alan Spross on Wed, 2008-12-03 22:11
No 2009 distribution required. The only way this could be messed up would be to take out an incorrect amount prior to age 59.5.
Correct amounts for 2009 up to age 59.5 are:
1) Nothing
2) 1/12 of the annual amount representing January
3) The full annual amount
The IRS has been very lenient with final stub year distributions in their interpretation of what is “substantially” equal. There are no letter rulings that reflect any connection of the distribution pattern in prior years to the final stub year payment requirement.
In other words, it does not matter how or when he distributed the 2008 or prior year amounts as long it was for the correct total. That said, the most risk free option for him would likely be to take nothing, since that would be consistent with his options AND with his past pattern.