72t mid year
When a 72t withdrawal is set up midyear, for example 7/1/2019. and the annual withdrawal would be $24,000, is it correct that the entire $24,000 must be taken in 2019 or can it be set up that the IRA pays out 2k/month beginning July 2019?
Permalink Submitted by Alan - IRA critic on Fri, 2019-06-21 19:07
For the first year of the plan, either a full annual distribution or a pro rated amount can be distributed. The frequency does not matter. For example, monthly payments of 2k could start in July, and 12k could be the total distributed for the year OR another 12k could be distributed in December or throughout the 6 months. The 1099R must show either 12k or 24k, nothing in between. Taking the extra 12k might be helpful in having a reserve against busting the plan. No decision needs to be made until December and then the person could determine if they might need this extra 12k by the end of the plan or if they will not need it. If this happens to be a 5 year plan (started after age 54.5) taking 6 months worth in the first year means that 6 months will also have to be taken in the 6th calendar year to meet the minimum of 60 months worth. Finally, in setting up monthly payments it is best to avoid the first 6 or last 6 days of the month since that could leave to a year end snafu with no time to correct it.