Retirement accounts are 100% tax deferred until you start taking withdrawals. Remember, 100% of the dollars taken from your retirement account will be added to your adjusted gross income when filing your taxes.
There are 3 IRS standard methods on how 72(t) distributions are calculated: Amortization Method, Annuitization Method, & Required Minimum Distribution Method
When setting up a 72t early distribution, the IRS life expectancy tables used to calculate a return including the interest rate are, Uniform Life, Single Life, Joint Life & Last Survivor table.
There are several ways you can “bust” a 72(t) distribution, and the consequences can have a severe impact on your taxes if the account is not managed properly.
Not all Financial Advisors, CPA’s, Tax Attorneys, Banks or Brokers know about this little known 72t IRS rule.
TIP: We have effectively set up 72t distributions for penalty free income many times throughout almost 50 years and this strategy works, IF DONE CORRECTLY.
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