A question about 72(t) and Roth conversion & distribution
I understand the benefit of the 72(t) distribution - a lot of tax savings can be garnered by avoiding the 10% early distribution penalty. However, it is a hard cap on the amount that can be distributed (hopefully, interest rates will rise a bit, making the calculation be higher.)
While I would be doing the 72(t) distribution, I would like to be able to introduce some flexibility in the net retirement distributions by being able to simultaneously convert some of the traditional IRA into a Roth, and/or taking distributions of the Roth contribution/conversion basis. The question is would either of these actions have any impact on the 72(t), or would I only need to insure that the same amount of (taxable) distribution from the traditional IRA be taken out every year without any regard to whatever may be done concerning Roth conversion and distributions.
On a side note (I think that the following would not be allowed but I'll throw it out anyway), what if I took part of my current traditional IRA and split it up into 2 traditional IRAs, and then did a 72(t) with one and do regular (i.e., with 10% penalty) distributions with the other? Like I said, I have a feeling that this would not be allowed.