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Saver's Credit
This is a new credit for 2002. Find out what you need to know about this credit.

Minimum Required IRA Distributions Reduced
P rovides details of the IRS regulations that reduce the minimum IRA distribution penalties for taxpayers who have attained the age of 70 ˝.

Parents Should Encourage Roth IRAs For Their Children
An overview of the long-term benefits of tax-free accumulation in Roth IRAs and how children can benefit.

Avoiding Premature Traditional IRA Distribution Penalties
A review of the various withdrawal exceptions that will avoid the 10% early withdrawal penalty for a taxable IRA distribution.

Self-Employed Pension Plan Contribution Limits Increased
Provides an overview of SEP and Keogh plans and details of the increased contribution limits beginning in 2002.

Pension Start-Up Credit
This is another new credit for 2002. Learn more about this credit and see if it applies to you.

Planning Your Taxable IRA Withdrawals
E xplores various strategies to minimize the tax on distributions from IRA accounts.

Don't Mix Required Minimum Distributions!
For those who have reached the age of 70 ˝ and have qualified retirement plans, find out more about required minimum distributions.

How Taxable Distributions From A Roth IRA Are Determined
Under certain circumstances, disqualified distributions from Roth IRA accounts can be taxable. This article describes the circumstances when that may occur and how the taxable portion is determined.

Increased IRA Contribution Limits And Catch-Up Contributions
T he Tax Act of 2001 substantially increases the allowable annual contribution to IRA accounts and provides catch-up contributions for taxpayers over 55. The article provides the details of those increases over the next few years.

Deemed IRAs Can Lead To Tax Problems
The Tax Act of 2001 allows employees to make “Deemed IRA” contributions through their employment. This article explores the potential problems that can arise if the taxpayer is not qualified for the type of IRA that the Deemed IRA contribution is directed into.

401(k) Contribution Limits Increased – Details of the increased contribution limits and make-up contributions provided by the Tax Act of 2001 for employer 401(k) plans.

Taxpayers Utilizing the Early Retirement Exception Should Read This
Because of the declining value of pension plans, the IRS has announced that taxpayers who retired before age 59 ˝ and are withdrawing from their qualified pension plans (such as IRAs) may reduce those payments one time by utilizing the "substantially equal payment" penalty.


Saver's Credit

New for 2002! The Saver's Credit provides a nonrefundable tax credit for contributions made by eligible, low income taxpayers to IRAs and qualified elective income deferrals. The plan provides incentives for lower income individuals to save for their retirement through available qualified plans. To qualify, the taxpayer must have reached the age of 18 by the close of the year and cannot be a full-time student or dependent of another. The credit ranges from 10% to 50% of the first $2,000 contributed to a qualified plan during the year. The credit gradually phases out as the taxpayer's income increases and is fully phased out for joint filers when their gross income (AGI) reaches $50,000 ($25,000 for single individuals and $37,500 for those filing head of household).

Minimum Required IRA Distributions Reduced

The IRS released regulations in 2002 that substantially simplify rules for required minimum distributions (RMD) from IRAs and certain employer-sponsored defined contribution plans.

There are new life expectancy tables that allow smaller distributions to be taken over a longer period.

The calculation of the RMD has been simplified by eliminating certain variables

Rules regarding separate accounts with different beneficiaries have been clarified.

Some flexibility is now available to change beneficiaries and split accounts allowing the heirs to retain more of the tax-deferred income for a longer period of time.

The IRS does not allow IRA owners to keep funds in a Traditional IRA indefinitely. Eventually, assets must be distributed and taxes paid. If there are no distributions, or if the distributions are not large enough, the IRA owner may have to pay a 50% penalty on the amount not distributed as required. Generally, distribution begins in the year the IRA owner attains the age of 70˝.

The Minimum Required Distribution Rules for IRAs have changed a number of times in the past few years. The rules included in this brochure reflect the changes included in the Final IRS Regulations, which are effective for tax year 2003 but can be used in 2002.


IRA owners must take at least a minimum amount from their IRA each year; starting with the year they reach age 70˝.

If a taxpayer fails to take a distribution in the year they reach 70˝, they can avoid a penalty by taking that distribution no later than April 1st of the following year. However, that means the IRA must take two distributions in the following year, one for the year in which they reached age 70˝ and one for the current year.

If an IRA owner dies after reaching age 70˝, but before April 1st of the next year, no minimum distribution is required because death occurred before the required beginning date.


For purposes of determining the minimum distribution, all Traditional IRA accounts owned by an individual are treated as one and the minimum distribution can be taken from any combination of the accounts. If the owner chooses not to take the minimum distribution from each account, it is not uncommon for IRA trustees to require written certification that the owner took the minimum distribution from other accounts.


The minimum amount that must be withdrawn in a particular year is the total value of all IRA accounts divided by the number of years the IRA owner is expected to live.

Determining Total Value: The total value is based on the sum of the value of all the owner’s accounts at the end of the business day on December 31st of the prior year. Generally, IRA account trustees will provide this information on the year-end statements or on IRS Form 5498.

Determining the Distribution Period: The IRS provides two tables for use in determining the IRA owner’s life expectancy (referred to as “distribution period” by the IRS). Generally, IRA owners will use the “Uniform Lifetime Table” to determine their “distribution period.” If the IRA owner’s spouse is the sole beneficiary (on all the IRA accounts), the Joint and Last Survivor Table may be used. However, the Uniform Lifetime Table will always produce the smallest minimum distribution, unless the spouse is more than 10 years younger than the IRA account owner. Example: The IRA owner is 75 and from the “Uniform Lifetime Table,” the owner’s life expectancy is 22.9 years.

Determining Age: Use the owner’s oldest attained age for the year of the distribution. Example: Suppose an IRA owner takes a distribution in February, when the owner’s age of 74, but later in November, turns 75. For purposes of determining the owner’s life expectancy, the oldest attained age for the year, 75 would be used in computing the minimum distribution. The same rule is used for the spouse beneficiary, if applicable.

Example: The IRA account owner is age 75 and the owner’s spouse, who is the sole beneficiary of the accounts, is age 72. Since the spouse is less than 10 years younger the IRA account owner, the Uniform Lifetime Table will produce the smallest required distribution. From the table, we determine the owner’s life expectancy to be 22.9. The owner has three IRA accounts with a combined value of $87,000 at the end of the prior year. The minimum distribution is $3,537 ($87,000 / 22.9).

UNIFORM LIFETIME TABLE – The following table is the one that is generally used to determine the Required Minimum Distribution from Traditional IRA accounts. Not illustrated, because of the size, are the Joint and Survivor Life Table used to determine RMDs when the sole beneficiary spouse is more than 10 years younger than the IRA owner and the Single Life Table used for certain beneficiary RMD determinations For table values not illustrated, please call this office.


The minimum distribution computation determines the amount that must be withdrawn during the calendar year. The distributions can be taken all at once, sporadically or in a series of installments (monthly, quarterly, etc.), as long as the total distributions for the year are at least the minimum required amount.

Amounts that must be distributed (required distributions) during a particular year are not eligible for rollover treatment.


There is no maximum limit on distributions from a Traditional IRA and as much can be withdrawn as the owner wishes. However, if more than the required distribution is taken in a particular year, the excess cannot be applied toward the minimum required amounts for future years.


Distributions that are less than the required minimum distribution for the year are subject to a 50% excise tax (excess accumulation penalty) for that year on the amount not distributed as required.

Example: The owner’s required minimum distribution for the calendar year was $10,000, but the owner only withdrew $4,000. The excess accumulation penalty is $3,000, computed as follows: 50% of ($10,000 - $4,000).

If the failure to withdraw the minimum amount or part of the minimum amount was due to reasonable error, and the owner has taken, or is taking, steps to remedy the insufficient distribution, the owner can request that the penalty be excused. However, the penalty must first be assessed and then refunded by the IRS if the request is approved.


Even though the IRA owner is not required to file a tax return, they are still subject to the minimum required distribution rules and could be liable for the under-distribution penalty even if no income tax would have been due on the under-distribution.


If the IRA owner dies on or after the required distribution beginning date, a distribution must be made in the year of death, as if the IRA owner had lived the entire year. If the distribution is after the owner’s death, the minimum amount must be distributed to a beneficiary.


When an IRA owner dies after beginning the required distributions and the beneficiary is an individual, the beneficiary must begin taking distributions the year after the IRA owner’s death as follows:

Spouse as Sole Beneficiary: The IRS permits a sole beneficiary spouse far more options than it does other beneficiates. When the spouse is the sole beneficiary the spouse has the following options:

Convert the IRA to their own account, thereby delaying additional distributions until they reach age 70 ˝.

Or, if already age 70 ˝, convert the IRA to their own account and begin taking RMD based on their attained age using the Uniform Distribution Table.

Treat the IRA as if it were their own, frequently referred to as recharacterizing the IRA to a “Beneficial IRA” and naming new beneficiaries. The spouse must begin taking minimum distributions in the year following the owner’s death based on their life expectancy using the Single Life Table. Distributions from Beneficial IRAs are not subject to the premature distribution penalties. Later, after they are no longer subject to the premature distribution penalty, the IRA can be converted as their own and they can choose to stop taking distributions until age 70 ˝.

The choice depends on the surviving spouse’s financial needs and goals and in most cases requires careful planning.
Caution: The sole beneficiary requirement is not met if the beneficiary is a trust, even if the spouse is the sole beneficiary of the trust.

Other Individual Beneficiaries: If the beneficiary or beneficiaries include individuals other than the spouse, then the first required distribution is the calendar year following the year of the IRA owner’s death. Using the Single Life Table, the post-death distribution period used to determine the RMD is the longest of:

  1. The remaining life expectancy of the deceased IRA owner using the deceased’s attained age in the year of death and subtracting one for each year subsequent year after the date of death.

  2. The remaining life expectancy of the IRA beneficiary using the beneficiaries attained age in the year of death and subtracting one for each year subsequent year after the date of death.

The beneficiaries’ remaining life expectancy is determined using the oldest beneficiary’s age as of their birthday in the calendar year immediately following the IRA owner’s death or for those accounts that were separated by the end of the year after the year after death, the age of each beneficiary. Where the beneficiaries include the spouse, account separation must be completed by September 30th instead of year-end to take advantage of the spouse sole beneficiary provisions.

5-Year Option: A beneficiary, who is an individual, may be able to elect to take the entire account by the end of the fifth year, following the year of the owner’s death. If this election is made, no distribution is required for any year before that fifth year.

The above rules apply only to distributions where the beneficiaries are all individuals and occur after the IRA owner has begun or is required to begin minimum IRA distributions. For distribution options for non-individual beneficiaries or for distribution options where the IRA owner dies prior to beginning the required minimum distributions, please call this office.

Advance planning can, in many cases, minimize or even avoid taxes on Traditional IRA distributions. Often, situations will arise where a taxpayer’s income is abnormally low due to losses, extraordinary deductions, etc., where taking more than the minimum in a year might be beneficial. This is true even for those who may not need to file a tax return but can increase their distributions and still avoid any tax. If you need assistance with your planning needs, please call this office for assistance.

Parents Should Encourage Roth IRAs For Their Children

The long-term benefits of tax-free accumulation provided by Roth IRAs are hard to ignore. Parents can do their children a real service by encouraging them to establish a Roth IRA at the first opportunity. A Roth IRA, left untouched until retirement, will ensure that your child has a substantial nest egg.

Take for example a youngster, age 17, who contributes $2,000 to a Roth IRA and allows that single deposit to accumulate untouched until retirement at age 65. At a conservative 8% annual growth, the Roth IRA will have grown to $80,421.

Consider what the result would be if that same young person continued to deposit $2,000 a year to their Roth IRA. Assuming an 8% annual growth, the Roth IRA will grow to $980,264 by the time they reach retirement age of 65.

But keep in mind that children, like adults, must have "earned income" to establish a Roth IRA. Generally, earned income is income from working, not from investments. Earned income can include income from a part-time job, summer employment, baby-sitting, yard work, etc. The amount that can be contributed to either a Traditional or a Roth IRA is limited to the lesser of earned income or $2,000.

Your children may balk at having to give up their earnings, especially since their focus at their age will not be on retirement. But this is not an obstacle if parents, grandparents or others are willing to fund all or part of the child’s Roth contribution.

If the parents or others contribute the funds, they need to keep in mind that once the funds are in the child’s IRA account, the funds belong to the child. The child will be free to withdraw part or all of the funds at any time. If the child withdraws funds from the Roth IRA, the child will be liable for any early withdrawal tax liability.

Avoiding Premature Traditional IRA Distribution Penalties

You may encounter certain financial situations making it necessary to withdraw funds from your IRA account. Funds withdrawn from a Traditional IRA are taxed at the regular income tax rates AND are subject to a 10% early withdrawal penalty if you are under 59-1/2 years of age at the time of the withdrawal. However, in addition to death, there are exceptions to this 10% penalty when you meet certain conditions or the funds withdrawn are used to pay certain qualified expenses. But remember even if you avoid the penalty with one of the following exceptions, the withdrawal is still taxable for regular tax purposes.

Higher education expenses such as tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a qualified student at an eligible educational institution. In addition, if the individual is at least a half-time student, room and board is a qualified higher education expense.

First-time homebuyer acquisition costs (within 120 days of the distribution) for the main home of a first-time homebuyer that is the taxpayer, spouse, child, grandchild, parent or other ancestor. The distribution is limited to $10,000 and if both husband and wife are first-time homebuyers, they each can withdraw up to $10,000 penalty-free.

Unreimbursed medical expenses, that are not more than: 1) The amount you paid for unreimbursed medical expenses during the year of the withdrawal, minus 2) 7.5% of your adjusted gross income for the year of the withdrawal.

Medical insurance premiums that you made as a result of becoming unemployed.

Disability - you are considered disabled if you cannot perform any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to last for a continued and indefinite duration.

Annuity distributions - if you retire before reaching the age of 59-1/2, you can avoid the penalty provided that the withdrawals are part of a series of substantially equal payments over your life (or your life expectancy), or over the lives (or joint life expectancies) of you and your beneficiary. The payments under this exception must continue for at least 5 years, or until you reach the age of 59-1/2, whichever is the longer period.

The foregoing is a brief synopsis of the exceptions to the early withdrawal penalty. The rules pertaining to these exceptions are extensive and you are cautioned to consult with this office prior to making any withdrawals to insure you qualify under the more detailed requirements.

Self-Employed Pension Plan Contribution Limits Increased

Tax laws provide for plans that allow self-employed individuals to establish retirement plans for themselves and their employees, if they have any. Those most frequently encountered are the SEP (Simplified Employee Pension) and Keogh Profit Sharing Plans. Even though they are not IRAs, the SEP plans utilize an IRA account as the depository for the SEP plan contribution, thus minimizing the administration requirements of the employer but limited the contributions prior to 2002 to 15% of earnings. The Keogh plans, on the other hand, offer both profit sharing and money purchase plans. Prior to 2002, the profit sharing plan contributions were limited to 15%, but the money purchase plans or combination of profit sharing and money purchase plans allowed contributions of up to 25%.

The compensation limits for both of these plans has been increased to 25% of compensation for years beginning in 2002. The following details the differences between contributions for employees and the amount allowed for the self-employed individual.

Employees: Contributions on behalf of an employee are currently limited to the lesser of $30,000 or 15% of the employee’s compensation (up to the compensation limit). Beginning in 2002, this has been increased to $40,000 or 25% of compensation up to the compensation limit. The compensation limit for 2001 is $170,000 and increases to $200,000 (adjusted for inflation) in 2002.

Self-Employed Individual: Under prior law, the contribution to a SEP by an owner-employee was limited to 15% of the net profits for self-employment (13.0435% of the net profits before deducting the contribution itself). Beginning in 2002, this contribution limit has been increased to 25% of the net profits from self-employment (20% of the net profits before deducting the contribution itself).

Under current law, Keogh Money Purchase Plans provide for contributions of up to 25% of compensation. However, the annual contribution to a Money Purchase Plan is mandatory while the contribution for a Profit Sharing Plan is discretionary. This essentially eliminates the need for Money Purchase Plans, since a Profit Sharing Plan provides for the maximum contribution while making the contribution discretionary.

Based on the limits, some employers and self-employed individuals may wish to alter their retirement plans. Please call this office for additional details.

Pension Start-Up Credit

New For 2002 !
This is a nonrefundable income tax credit for 50% of the administrative and retirement-education expenses for any small business (less than 100 employees) that adopts a new qualified defined benefit or defined contribution plan (including a Code Sec. 401(k) plan), SIMPLE plan, or simplified employee pension ("SEP"). The credit is limited to 50% of the first $1,000 of administrative and employee retirement-education expenses in each of the first three years of the plan.

Planning Your Taxable IRA Withdrawals

Your age at the time you make a taxable withdrawal from your Traditional IRA account can make a big difference in the amount of tax you will pay. Generally, there are three periods within your lifetime where different tax rules apply:

Under Age 59˝ - If you withdraw the IRA funds before you reach age 59 ˝, you will pay tax and a 10% early withdrawal penalty unless you can avoid the penalty through one of the several exceptions provided in the tax law. Note: Some states also have small early withdrawal penalties.

Age 59˝ to Age 70˝ - During this period you can make withdrawals of any amount without penalty. You are only subject to the income tax.

Above Age 70˝ - After reaching age 70 ˝, you must begin taking at least the required minimum distributions or face the 50% excess accumulation penalty.

The number one key to minimizing taxes on IRA distributions is to match withdrawals to tax years in which you are in a low tax bracket or even have a negative taxable income. Take for example a year when because of illness, disability, unemployment, large business losses etc. that your income, less your deductions and personal exemptions, leaves you with a negative taxable income for the year. To the extent your taxable income is negative, you could make a taxable IRA withdrawal and avoid any tax on the amount withdrawn, and even if you are under 59 ˝, you would only pay the small early withdrawal penalty.

Generally, except as mentioned above, if you are under 59˝, your IRA funds are not a good source of cash except in cases of extreme need simply because of the tax liability and penalties. But if there are no alternatives, it may be possible to avoid part or all of the penalties by carefully planning the withdrawals so that they qualify for one or more of the early withdrawal penalty exceptions; (1) amounts withdrawn to pay un-reimbursed medical expenses, (2) amounts withdrawn while qualifying as disabled, (3) amounts withdrawn and used to pay for medical insurance while unemployed, (4) amounts used to pay higher education expenses, (5) amounts up to $10,000 for the purchase a first home, and (6) early retirement amount withdrawn as an retirement annuity. Taxpayers must meet certain criteria to qualify for these exceptions, so be sure to contact this office to make sure you meet those qualifications before proceeding.

For retired individuals, receiving Social Security benefits, planning IRA distributions can also be beneficial. Social Security itself is only taxable when ˝ of the taxpayer’s Social Security benefits added to the taxpayer’s other income exceeds $25,000 ($32,000 for a married couple filing jointly). Once this threshold is reached, every additional dollar of other income will cause 50 to 85 cents of the Social Security benefits to also become taxable. Therefore, if a taxpayer’s other income is under the threshold, it is generally good practice to withdraw just enough taxable IRA funds to bring the income up to the threshold amount even if the funds are not needed in that year. They can be set-aside for a future year when they might be used for some unplanned need or large purchase. Retirees, with income that already puts them over the Social Security taxable threshold, should avoid large uneven withdrawals that might push them into a larger tax bracket one year and way below that tax bracket change in other years.

Remember, once a taxpayer reaches 70˝, they must begin taking distributions equal to or greater than the Required Minimum Distribution, somewhat limiting planning options. If you wish to explore any of these or other tax saving techniques, please contact this office.

Don't Mix Required Minimum Distributions!

Taxpayers who have reached the age of 70˝ and have qualified retirement plans are generally required to take minimum distributions from those plans annually. Quite frequently, taxpayers have multiple IRA accounts in addition to one or more types of qualified plans.This gives rise to a commonly asked question, "Must I take a distribution from each individual account?" For purposes of the annual required minimum distribution, a separate distribution must be taken from each type of plan. However, a taxpayer may have multiple accounts for each type of plan, which for tax purposes are treated as one plan. For example, you have three IRA accounts. The three separate accounts are treated as one for tax purposes, and the distribution can be taken from any combination of the accounts.

How Taxable Distributions from a Roth IRA are Determined

Withdrawals from a Roth IRA are tax-free if the funds have been in the Roth IRA for at least five years, and

The account owner is at least 59-1/2, or

The funds are used for a qualified first-time home purchase (up to $10,000), or

The accountholder becomes disabled or dies.

Suppose a taxpayer does not meet the requirements for a tax-free withdrawal. The funds contributed to the IRA are always tax-free, because taxes were paid on those funds before they were deposited. Only the earnings would be taxable. Then the question becomes which funds are withdrawn first? Anticipating this question, the IRS has established a set of “Ordering Rules” which specify the sequence in which funds are withdrawn. All Roth IRAs, regardless of where they are deposited, are treated as one for purposes of the “Ordering Rules.”

First from contributions until all contributions have been withdrawn (these funds would be withdrawn tax and penalty-free);

Next from all converted (rollover amounts) until all have been withdrawn (these funds would be withdrawn tax-free, but see acceleration clause below);

Finally, from earnings (these funds would be taxable, and subject to the early withdrawal penalty when the taxpayer is under 59-1/2 years of age.)

Acceleration Clause: If the taxpayer converted funds from a Traditional IRA in 1998 and elected to spread the tax over four years and withdraws any of the taxable portion of the converted funds, then the taxability of the converted funds is accelerated. This is best described by example. Suppose a taxpayer converted $20,000 from a Traditional IRA to a Roth IRA and elected the special 4-year taxation. $5,000 would be taxable each of the four years. However, if the taxpayer withdrew $7,000 of the $20,000 in 1999, the taxable portion for 1999 would be $12,000 ($5,000 plus the $7,000 withdrawal.) In the year 2000, only $3,000 would be taxable (the remainder of the $20,000) and nothing would be taxable in 2001, the final year of the 4 years.

Taxable IRA Income – Acceleration Example:

Deemed IRAs Can Lead To Tax Problems

The 2001 Tax Act created a way for taxpayers to make both Traditional and Roth IRA contributions through their employer’s qualified plans. Under this program, employees can make “volunteer employee contributions” which can be designated as either Roth or Traditional IRA contributions. However, even though these IRA contributions are being made through the employer’s “Deemed IRA” program, you still must meet all of the normal income qualifications and contribution limits for either the Roth or Traditional IRAs. If you do not qualify, then the “Deemed contributions” would be considered over-contributions that would have to be corrected and could incur some tax penalties. Therefore, before becoming involved with a Deemed IRA program, we strongly suggest you contact this office.

401(k) Contribution Limits Increased

Many employers offer what are commonly referred to as 401(k) plans named after the tax code section that created the plans. These plans allow employees to defer part of their earnings for retirement. Some employers offer matching contributions that increase the attractiveness of the programs.

Beginning in 2001, the value of 401(k) plans is enhanced even further by increasing the general contribution limit and allowing individuals over age 50 to make additional contributions. The Act also allows individuals to contribute amounts that are not excluded from income to a 401(k) plan in a manner similar to Roth IRA contributions.

The so-called “catch up contributions” allow individuals age 50 and over to make additional annual contributions to 401(k) plans. These “catch-up” contributions are $1,000 in 2002; $2,000 in 2003; $3,000 in 2004; $4,000 in 2005 and $5,000 in 2006 and thereafter. Catch-up contributions are exempt from the regular dollar limits on deferrals provided that all 401(k) plan participants are permitted to make catch-up contributions.

The table below summarizes the limits for 401(k) plans through 2006. If you have additional questions about participating in your employer’s 401(k) plan, please call this office

Substantially Equal Payment Exception

The decline in the stock market has adversely affected the value of taxpayer’s retirement investments. This decline in value of retirement accounts has uniquely affected taxpayers who have taken early retirement.

Generally, taxpayers who withdraw from their pension plans including IRAs before reaching age 59 ˝ are subject to the 10% early withdrawal penalty. However, taxpayers who retire can avoid that penalty by using a special exception that requires that they take substantially equal payments from their pension plan for a period of time that is the longer of five years or the until they reach 59 ˝.

The substantially equal payments are computed based on the value of the retirement account. Those retirees who retired before the decline in the market may have substantially equal payments that are excessive for account that have substanilly declined in value and are depleting the plan to a point that future recovery is threatened.

Because of this, the IRS has announced that it will allow taxpayers to make a one-time change to the Minimum Required Distribution method, which is the same method used by individuals who have reached the age of 70 ˝.

This one-time change will only allow a taxpayer to switch to the Required Minimum Distribution (RMD) method. Caution: switching to the RMD may substantially reduce the annual distribution and may not allow an affected taxpayer to withdraw enough to meet their current financial obligations while they wait to meet the 5-year or age 59 ˝ rule. Many of them are counting on the early pension withdrawals until they start receiving their Social Security or employer retirement. Once they switch, they cannot increase or decrease their withdrawal without violating the exception.