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72(t), SEPP Distributions from 401(k)

Last Updated December 17, 2015

Question: 

I would like to take 72(t) payments from my 401(k) plan, but I have received conflicting information as to whether this can be done from a retirement account that is not an IRA.  What is the right answer?

 

Answer: 

72(t) payments – also referred to as Substantially Equal Periodic Payments (SEPP) can be taken from IRAs, qualified plans-including 401(k) plans, and 403(b) accounts. However, while 72(t) payments can be taken from IRAs at any time, they can be taken from qualified plans and 403(b) accounts only after the participant has separated from service with the employer that sponsored the plan. Therefore, if you are still employed by the company that sponsored your 401(k) plan, you cannot take 72(t) payments from that account.  But, if you are no longer employed by that company, then you may be able to take 72(t) payments from the account.

Please contact our office to help you determine if a 72(t) payment program is suitable for you.

Question answered by by Denise Appleby