In order to qualify for the exception to the 10% penalty from premature distributions under IRC 72(t), is it alright to begin monthly substantially equal periodic payments in mid-year such that the total of the payments during the initial year would be less than a full year's worth? I believe this question is somewhat corollary to the amount which must distributed in the year in which the taxpayer reaches age 59 1/2. Thus, in the initial year and in the final year of age 59 1/2 (assuming that a full 5 years 60 months minimum has transpired), is it permissible to make the monthly payments effective with a mid-year start date for example July 2000 and the monthly payments cease with the month of June 2005 (assuming age 59 1/2 had been attained by June 2005)?

Check out Private Letter rulings 9049044 and 9046064. They may help.