72T
After reading some previous posts on this site, I wanted to ensure I understand the rules/regs regarding the date of an annual 72t distribution. The first 72t distribution occurred on Jan 11, 2024 for $65,000. My understanding is the 72t distribution in 2025 can occur on any date as long as its completed by 12/31/25. The clients intent is to take as a lump sum, I’m aware he could take monthly but concept was not a need for the funds but wanted to utilize their 12% marginal bracket now since they have large cash reserves to utilize over coming 5 plus years.
I realize the $65,000 amount needs to be the same but waiting until December allows a better view of tax witholding required to cover clients YTD expected Federal tax liability above and beyond the $65,000 tax liability.
Permalink Submitted by Alan - IRA critic on Wed, 2025-01-08 11:57
Yes, there is no requirement that the distribution timing or frequency must be the same from year to year, so the 65000 can be withdrawn in December, 2025.
If the client wants to reduce the annual distribution this year or in a future year they could make a one time switch to the RMD method if not using that method now.