72t change
I have a client whom we just began a 72t distribution in Jan 2009 (withdrawing monthly using the annual amount of the 72t distribution). They would like to change to distribution to annual, can I simply withdraw the remainder of the years withdrawal next month in one lump sum and not bust the 72t?
Permalink Submitted by Alan Spross on Tue, 2009-01-20 17:51
Yes, as long as the total 2009 calendar year distribution is correct, the plan is intact. However, taking the lions share of the alloted distribution early in the year sets up some serious budgeting constraints. It also sets up the increased possiblity that come next January, the client will want to do the same thing.
Hopefully, the adequacy of the annual amount is not in question, but if it is and the client has access to a larger account balance, the current plan could be busted and a new one started and there would only be a penalty on the January distribution. There would also be pressure to start the new plan prior to month end because the interest rates drop sharply for plans starting after January.
But the simple answer is that the balance of the calculation CAN be taken next month, and in 2010 client can again change the distribution pattern.