Wednesday, May 9, 2012 4:00 PM – 5:00 PM EDT
72-T is an Internal Revenue Service (IRS) rule that allows for penalty-free withdrawals from an IRA account. The rule requires that, in order for the IRA owner to take penalty-free early withdrawals, he or she must take at least five “substantially equal periodic payments” (SEPPs). The amount depends on the IRA owner’s life expectancy calculated with various IRS-approved methods. Rule 72(t) allows you to take advantage of your retirement savings before the age of 59.5, when there is otherwise a 10% penalty on early withdrawal. There are strict rules that you must follow; otherwise, you pay hefty penalties.
Jeffrey Levine is an IRA Technical Consultant with Ed Slott and Company, LLC. He is an expert in IRA distribution planning and is a consultant for both advisors and clients.
Jeffrey is a contributing writer and editor for Ed Slott’s IRA Advisor newsletter distributed to thousands of financial advisors nationwide and writes for several areas of the company’s website, www.irahelp.com. He has been quoted in numerous publications throughout the country, from the New York Times to the San Francisco Chronicle.