I'm working with an individual who is wanting to explore the option of taking substantially equal periodic payments under Code Section 72(t). He has two investment accounts - a mutual fund account and a variable annuity. Can he take the payments all from one account until that account is exhausted? For example, he would like to take the payments from the mutual fund account and leave the variable annuity untouched for now. As long as the correct amount of distributions are taken, is this acceptable? I haven't found anything to say that it isn't, but wanted to see if you ladies and gentlemen have any thoughts.

Thanks!

Generally speaking the answer to the question is yes. Will he include both accounts in his initial calculation? If so, no problem. You didn't specify if these accounts are in IRAs. If the annuity is not within an IRA under 408(a) then 72(t) does not apply to the annuity, 72(q) does and you can't mix the two. There is a website that deals almost exclusively with these issues and you may want to check their discussion board part of the site. The site is 72t on the net and is Here