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Author: RBStanley Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Est Tax Withholding from 72(t) Distribution Date: 2/2/2001 8:01 PM
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I retired last year at age 52 and started a 72(t) substantially equal payment withdrawal from my IRA. I requested my IRA trustee to withhold appropriate Fed and State taxes before this distribution was made. This worked ok in 2000. Now in 2001, I find I am back at work as a part time consultant but still obligated to continue my 72(t) distribution for many years to come.

My questions:

1. As long as I have enough Fed and State withholding taken out of my IRA distribution to cover all my income sources, do I need to make quarterly estimated tax payments?

2. Since my consulting income may be enough to meet my ongoing income needs during the year, can I wait until Dec of 2001 to take my 72(t) distribution (with enough withholding to cover all my 2001 income) thus skipping all quarterly estimated tax payments and holding onto my money as long as possible?

Appreciate any comments.



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Author: rensimer Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 45445 of 121061
Subject: Re: Est Tax Withholding from 72(t) Distribution Date: 2/3/2001 10:11 AM
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My answers:

1.No

2.Yes

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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 45448 of 121061
Subject: Re: Est Tax Withholding from 72(t) Distribution Date: 2/3/2001 11:13 AM
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1. As long as I have enough Fed and State withholding taken out of
my IRA distribution to cover all my income sources, do I need to
make quarterly estimated tax payments?

2. Since my consulting income may be enough to meet my ongoing
income needs during the year, can I wait until Dec of 2001 to take my
72(t) distribution (with enough withholding to cover all my 2001
income) thus skipping all quarterly estimated tax payments and
holding onto my money as long as possible?


You are correct. You can delay withdrawal and withholding till anytime in 2001, O.K. and not make estimated payments. See Form 2210 about withholding being averaged and other "safe harbors". ed

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