72t
If someone under 59 and half wants to do a 72t withdrawal and has 3 IRAs each with $100,000 in value – so a total IRA balance of $300,000 – does he have to aggregate all of his IRAs in order to figure out his 72t amount? Or can he use one of his $100k IRAs and just figure a 72t withdrawal from just this one?
Permalink Submitted by Alan Spross on Wed, 2011-11-23 21:22
You can use any number of the IRAs for the 72t plan. Typically, you would use a reverse calculator to determine what IRA balance you would need to fund the distribution amount you want. Then you would partition your IRAs by direct transfer to create one with the exact balance needed to generate the distribution you want. If this amount is less than your balance of all your IRAs, you could use the IRA that is NOT part of your plan for emergency needs as insurance against having to bust the 72t plan. Or, if you later determine that the 72t plan is not generating enough income, you could then start a 2nd independent 72t plan using the balance of the other IRAs or part of the other IRAs.
With interest rates as low as they are now, you will find that 300,000 will probably produce an annual distribution of around 14,000.