72(t) distributions
Good Morning: When calculating a payout for a 72t on a 55 year old female with no income on IRA assets, do you calculate the payment on the aggregate of all IRA assets or just the specific IRA that the distribution will come out of? This particular person has two IRA’s, $545,000 and a $325,000 IRA. The distribution will be coming from the larger IRA but I want to use both IRA’s in the calculation. Can we combine the 2 balances for calculation and distribute from one account similar to RMDs?
I understand she will need to continue with distributions for at least 5 years
Thanks in advance
Permalink Submitted by Alan - IRA critic on Wed, 2021-02-10 17:57
Yes, the two balances can be combined using the same date for determining the balance, but the 72t distributions can be taken from just one of the IRAs or in any combination between the two. But simpler is better with 72t plans to avoid attracting IRS attention, so if she takes the total calculated amount from one IRA it will be best to continue that. But the other account is still part of the plan and making a contribution to either IRA or taking a non 72t distribution from either will bust the plan. She will have a 5 year plan (5 years comes later than 59.5) and it is also best to take the full annual calculation in 2021-2025, then take no distribution in 2026 prior to the termination of the plan which is 5 years from the date of the first 72t distribution.