72T Question
Hello,
I have a client who is 58 this year and the spouse is 49 this year and the client is looking to start a $1.5 SEPP the start annual this month using a 5.17% interest rate. On the paperwork they elected to use the joint life table and our custodian is allowing them. I thought the age difference has to be 10 years or more the use the joint life table. I just wanted to get a second opinion on this.
Thank you.
Permalink Submitted by Alan - IRA critic on Tue, 2025-02-11 15:02
The 10 year difference is for RMDs. The joint life table can be used with the correct ages for calculating a 72t. With a 9 year age difference the calculation will be very close to that of the Uniform Table which is built on a 10 year difference.
That said, these tables apply to all calculation methods, both the RMD method and the fixed dollar methods.
Next issue is the interest rate. 5.17% is higher than the rate for Dec or January. The Feb rate cannot be used unless the first distribution is delayed until March.
Too bad that a 72t plan must be started this close to age 59.5 since the rigid requirements will last for 5 years from the date of the first distribution.
Permalink Submitted by japh on Tue, 2025-02-11 17:05
Client may want to look at just taking whatever amount is needed for the year and paying the 10% penalty instead of committing to a 72t plan that must last at least 5 years.