CRDs and SEPP 72(T) payments

Submitted by Baird Wealth Planning on Thu, 2020-04-23 16:12

Can someone take the $100k CRD on top of a prearranged 72(T) SEPP payment? Or does the $100k max need to be reduced by the 72(T) payment?

Permalink Submitted by Alan - IRA critic on Thu, 2020-04-23 17:41

There are no exceptions included for SEPP plans under the limited guidance we have.
However, Pub 976 issued to address natural disaster distributions a few years ago states that disaster distributions up to 100k from the SEPP plan will not constitute a modification of the SEPP. It is expected that CRDs will track existing regulations issued in the past for disaster distributions, so there is a good chance that such distributions will be allowed once final regulations for CRDs are published.

Permalink Submitted by Alan - IRA critic on Sat, 2020-04-25 14:39

NOTE: Bump to top – original response edited.

Permalink Submitted by ShipsnGiggles on Wed, 2020-05-20 13:03

can a “qualifiying individual” take a CRD out of the same IRA that they are taking SEPPs without the CRD being considered a modification? thank you

Permalink Submitted by Alan - IRA critic on Wed, 2020-05-20 14:17

See above post. The IRS has referred taxpayers to Notice 2005-92 (Hurricane Katrina distributions) to serve as a model for the expected Regulations for CRDs. The following is copied from that Notice.
H. Katrina distributions will not be treated as a change in substantially equal periodic payments. In the case of an individual receiving substantially equal periodic payments from an eligible retirement plan, the receipt of a Katrina distribution from that plan will not be treated as a change in substantially equal payments as described in § 72(t)(4) merely because of the Katrina distribution.