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epehooray
New Member

I turned 59 1/2 in 2018. Prior to that, I was withdrawing via a 72T. After turning 59 1/2, I took out a lump sum. How do I differentiate this when doing my taxes?

Simple example- Since retirement I withdrew $1,000 a month on a valid 72T. Turned 59 1/2 in August. In September I withdrew $10,000. When reporting the income, how will I be able to show that the 72T was followed correctly till after it no longer applied?
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dmertz
Level 15

I turned 59 1/2 in 2018. Prior to that, I was withdrawing via a 72T. After turning 59 1/2, I took out a lump sum. How do I differentiate this when doing my taxes?

There is no way to indicate that on your tax return.  You would only provide specifics to the IRS if they claim that you busted the 72(t) plan.  If they do, you'll need to be able to show that the lump sum was distributed more than 1,826 days after the first 72(t) distribution to show that you completed a full 5 years under the 72(t) plan before modifying the plan.

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2 Replies
dmertz
Level 15

I turned 59 1/2 in 2018. Prior to that, I was withdrawing via a 72T. After turning 59 1/2, I took out a lump sum. How do I differentiate this when doing my taxes?

There is no way to indicate that on your tax return.  You would only provide specifics to the IRS if they claim that you busted the 72(t) plan.  If they do, you'll need to be able to show that the lump sum was distributed more than 1,826 days after the first 72(t) distribution to show that you completed a full 5 years under the 72(t) plan before modifying the plan.

dmertz
Level 15

I turned 59 1/2 in 2018. Prior to that, I was withdrawing via a 72T. After turning 59 1/2, I took out a lump sum. How do I differentiate this when doing my taxes?

Also, the portion distributed after age 59½ should have been reported on a separate Form 1099-R with code 7 (unless the plan believed that you busted the 72(t), in which case it should have been reported with code 1 even though you were over age 59½).
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