Save time with our cheat sheets, fact sheets, checklists & books!

March 6, 2009

Can I start a second SEPP/72(t) On Another IRA?


Can I start a second SEPP/72(t) On Another IRA?

Question Is it permissible for me to start a second 72(t) Payment on a separate IRA, when I already have a 72(t) Payment Scheduled on another IRA?

Yes. You can do a 72(t) for each of your IRAs.

Generally, 72(t) calculations are done on a ‘per account’ basis. This allows the IRA owner to make additional non-72(t) withdrawals – if necessary- from the other IRAs, without affecting the 72(t) schedule of payments.

Additionally, if the IRA owner feels that he needs additional amounts on a consistent basis (as opposed to a one-time or infrequent basis); he may start a new 72(t) schedule of payment on another IRA.

Example 1

TJ has an IRA balance of $500,000. He wants to take 72(t) payments from his IRA, in order to avoid the 10% early distribution penalty. However, the $500,000 would produce much more than TJ needs. Therefore, TJ split the IRA into two IRAs (IRA #1 and IRA # 2), and takes the 72(t) from IRA #1.

Two years later, TJ needed an additional $5,000 to cover a one-time expense. He withdrew that amount from IRA # 2. This did not affect the 72(t) on IRA # 1.

Example 2

Assume the facts are the same as in Example 1. Except that TJ needed additional funds on a consistent basis, as his living expenses had increased significantly. TJ decided to take a second 72(t) payment schedule from IRA #2.

This is permissible, and does not affect the 72(t) under IRA # 1.


Keep Learning

Individual Retirement Arrangement (IRA)

 Definition Individual retirement arrangement (IRA) is an umbrella term that covers individual retirement account and individual retirement annuity. These are retirement savings vehicles established by

Partial Recharacterization

Definition A recharacterization of less than the account balance (from which the contribution or conversion is being recharacterized), or less than the total (traditional or

HSA Funding Distribution (HFD)

Definition A qualified HSA funding distribution (QHFD) is a distribution from a traditional IRA or a Roth IRA , that is made to the individual’s Health

Be among the first to know when

IRA Rules