Distributions from a tastyworks IRA cannot be coded as a 72(t) distribution at this time, but customers can still claim this exemption at the time they file their taxes.
Regardless of what your retirement goals are, it’s good to know when you can tap into your nest egg. We all know that the IRS allows penalty-free distributions from your qualified account after reaching 59 ½, but the IRS allows for another penalty-free method before 59 ½ under IRS Rule 72(t).
So, what is a 72(t) distribution? The IRS allows for withdrawals from an IRA account without penalty if the account holder takes out at least five substantially equal periodic payments (SEPPs). SEPPs are determined by the account holder’s life expectancy and one of three calculation methods:
- Required minimum distribution method
- Fixed amortization method
- Fixed annuitization method
To read more about this IRA distribution method, including calculation methods, you may visit this topic at the IRS by clicking here.
Although this rule can help with avoiding a 10 percent early withdrawal penalty, distributions are subject to normal income tax rates.
tastyworks IRA account owners are solely liable and responsible for their compliance with IRS rule 72(t). Please consult a tax professional if you plan or are considering IRS Code 72(t) for your retirement needs.