72t distributions
It appears once the IRA(annuity) value depletes to zero does not violate and create the 10% penalty nor the recapture tax. But, if the client’s IRA(annuity) is annuitized at zero value and continues to receive payments for the rest of their life, does that trigger the penalty or tax? I started taking the 72t distributions at age 38, and, my value goes to zero this month, than, it is annuitized…I am currently age 54.
Permalink Submitted by Alan - IRA critic on Tue, 2023-08-15 21:17
If a 72t IRA is fully depleted the plan just ends with no penalty as you indicated. But there must be some value left in this annuity to annuitize, so it is not fully depleted? Changing to annuitized distributions will bust the plan because the new distribution amount will differ from the original 72t calculated distribution using one of the 3 approved methods. It sounds like too many optional features were added to this annuity and they conflict with the requirements for a 72t plan.