72-T Plan

[Christian]

A client retired last year having placed his company plan into a personal IRA. He put a 72-T plan in place until reaching age 591/2 in some three years. He has the expectation that on reaching 591/2 he can increase his distribution. My reading of the info I received from a member of our board from the Slott Report commits him to a payout for five years in the amount he set up irrespective of the fact he turns 591/2 in three years. The question is can he raise his distribution once reaching 591/2 or is he stuck with his fixed distribution until five years have elapsed ?

[Lion EA]

https://www.investopedia.com/terms/r/rule72t.asp

https://smartasset.com/retirement/rule-of-55-vs-72t

See Practice Tip! in the below for a one-time change for which he might qualify:

https://www.lordabbett.com/en-us/financial-advisor/insights/retirement-planning/a-new-irs-rule-makes-early-ira-withdrawal-more-attractive.html

[Christian]

Well I now see what his problem is along with the five year rule. Like others he sorta wondered into this arrangement not fully checking it out completely. He now wants to modify his distribution method due to stock market losses transferring a part of the account into some form of annuity arrangement. It's all very interesting so I sent him a copy of the report I had and he and his broker can sort this out. Personally I suspect if they are not really careful they may run afoul of the regs. He began distributions last year so whatever rules apply were in effect then.