72T Distribution

You are referring to that portion of 72(t) that allows you to establish a series of Substantially Equal Periodic Payments (SEPP) plan which you must follow for at least 5 years and until you reach age 59 1/2.

The amount distributed each year under the SEPP plan from this particular IRS account, and the SEPP applies to a particular account, not all the moneys in your IRA, has to be calculated as that amount which drains your account to zero at the end of your statisticallly-determined lifespan.

So you need to choose the account and calculate the annual SEPP amount and not deviate from it for the whole time you're followin the SEPP plan.

Deviate from it, and all the distributions from the first year on the plan could be subject to the 10% penalty.

IRS Pub 590 gives a safe harbor method of calculating the annual distribution, meaning if you follow that method the IRS will not challenge it. Other methods exist and you should consult with a local tax professional familiar with SEPP calculations if you plan to use another method.

Your method does not rely on distributions from one IRA account and there's no indication the amount is correctly calculated under an acceptable method, so you have not shown it meets the rules to be a proper SEPP plan.

=============== =========== While on the subject of SEPP plans, I have seen over the past few years more and more large IRA custodians, including a giant financial institution in Boston, quite willing to set clients up with an SEPP and distribute the SEPP amounts, but they now code the 1099-R with a "1" meaning taxpayers have to file a form 5329 to avoid a nasty CP2000, or pay their tax preparers to do this for them.