72t SEPP Disbursements

[Ray P]

I will be ready to start taking 72t disbursements next year. What documents do I need to preform the required separation? Is there any advantage to waiting until my 1/2 birthday. What other forms or requirements are necessary?

Ray P

Contact

[Mark Nolan]

Unfortunately, the IRS 72t Substantially Equal Periodic Payment Rules do not permit distributions from qualified plans such as a Solo 401k until the participant separates from service, which in the case of a self-employed person means not until the self-employed business sponsoring the solo 401k is shut down.

Here is the language straight from the IRS website.

“If these distributions are from a qualified plan, not an IRA, you must separate from service with the employer maintaining the plan before the payments begin for this exception to apply.”

And here is the IRS website containing the above.

http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Payments

irs.gov

Substantially equal periodic payments | Internal Revenue Service

Insights into substantially equal periodic payments under IRC section 72(t)(2)(A)(iv), with examples.

Mark Nolan

Compliance Officer

Contact

1-800-489-7571 www.mysolo401k.net