Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any...

Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.

72(t) Distributions72(t) Distributions

Your Name Your CompanyYour Name Your Company

AgendaAgenda

• 72(t) Basics

• When 72(t) May Make Sense

• Common 72(t) Strategies

• Next Steps

• 72(t) Basics

• When 72(t) May Make Sense

• Common 72(t) Strategies

• Next Steps

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72(t) Basics72(t) Basics

Penalty is waived for IRA 72(t) distributions that are:

• Part of a series of “substantially equal periodic payments” (SEPPs) made on a regular basis (annually, quarterly or monthly)

• Calculated according to one of the three IRS-approved methods

• Continued for at least five years or until you reach age 59½ — whichever is longer

Penalty is waived for IRA 72(t) distributions that are:

• Part of a series of “substantially equal periodic payments” (SEPPs) made on a regular basis (annually, quarterly or monthly)

• Calculated according to one of the three IRS-approved methods

• Continued for at least five years or until you reach age 59½ — whichever is longer

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72(t) Basics72(t) Basics

Changing your distribution method

A one-time irrevocable switch is allowed from fixed amortization or fixed annuitization methods to the RMD method.

Why do it?

• The value of your IRA has declined substantially

• Your situation has changed and you no longer want large periodic payments

Changing your distribution method

A one-time irrevocable switch is allowed from fixed amortization or fixed annuitization methods to the RMD method.

Why do it?

• The value of your IRA has declined substantially

• Your situation has changed and you no longer want large periodic payments

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When 72(t) May Make SenseWhen 72(t) May Make Sense

The strategy may be helpful for investors who are:

• In strong financial shape and would like to retire early by drawing on IRA savings

• Laid off or forced to take early retirement, and in need of a source of regular income

The strategy may be helpful for investors who are:

• In strong financial shape and would like to retire early by drawing on IRA savings

• Laid off or forced to take early retirement, and in need of a source of regular income

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Taking 72(t) distributions from Roth IRAs is allowed, but usually unnecessary:

• Roth IRA contributions can already be withdrawn tax and penalty free after five years

• Taking 72(t) distributions on earnings alone is unlikely to produce large payments

Taking 72(t) distributions from Roth IRAs is allowed, but usually unnecessary:

• Roth IRA contributions can already be withdrawn tax and penalty free after five years

• Taking 72(t) distributions on earnings alone is unlikely to produce large payments


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Potential drawbacks

• Dipping into retirement savings can have consequences later

• Difficulty in altering distributions

Potential drawbacks

• Dipping into retirement savings can have consequences later

• Difficulty in altering distributions


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Common 72(t) StrategiesCommon 72(t) Strategies

• Use the smallest amount of assets necessary to meet current income needs

• Consider splitting your IRA into two accounts and taking distributions from only one

• Use the smallest amount of assets necessary to meet current income needs

• Consider splitting your IRA into two accounts and taking distributions from only one

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1. The person portrayed in this example is fictional. Example assumes application of 28% federal income tax rate. This material does not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted.


Louise’s1 financial situation

• Forced to accept early retirement at age 50

• Received a lump sum of $200,000 from her 401(k) plan

• Looking for a new job and plans to work until age 65

• Has a monthly cash flow shortfall of $590

Louise’s1 financial situation

• Forced to accept early retirement at age 50

• Received a lump sum of $200,000 from her 401(k) plan

• Looking for a new job and plans to work until age 65

• Has a monthly cash flow shortfall of $590

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Louise’s four options

1. Pay current income taxes and penalties on her 401(k) and invest the proceeds.

2. Roll over a portion of the $200,000 into an IRA.

3. Roll over the entire $200,000 directly into an IRA.

4. Roll over the entire $200,000 directly into an IRA and set up a series of 72(t) distributions.

Louise’s four options




4. Roll over the entire $200,000 directly into an IRA and set up a series of 72(t) distributions.

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The Costs of Not Rolling Over

No Rollover Direct IRA Rollover

Amount of distribution/rollover $200,000 $200,000

Federal income taxes at 28% bracket ($56,000) $0

10% premature distribution penalty ($20,000) $0

Amount available for investment $124,000 $200,000

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• Some money would still be lost to ordinary income taxes and penalties

• Some money would still be lost to ordinary income taxes and penalties




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• Tax efficient, but leaves no assets for immediate use

• Tax efficient, but leaves no assets for immediate use




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• Tax efficient and incurs no penalties

• Provides income for immediate use

• Can help achieve other goals if split into two IRAs

• Tax efficient and incurs no penalties

• Provides income for immediate use

• Can help achieve other goals if split into two IRAs


4. Roll over the entire $200,000 directly into an IRA and set up a series of 72(t) distributions

4. Roll over the entire $200,000 directly into an IRA and set up a series of 72(t) distributions

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Louise’s goals:

• Making up monthly cash shortfall

• Growing assets for retirement

• Maintaining financial flexibility

Louise’s goals:




Why 72(t) distributions may be an appropriate optionWhy 72(t) distributions may be an appropriate option

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Why 72(t) distributions may be an appropriate optionWhy 72(t) distributions may be an appropriate option

Louise’s goals:




Louise’s goals:




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A look at the resultsA look at the results

By choosing to roll over her 401(k) assets into an IRA, split the accounts and take 72(t) distributions from one of them, Louise:

• Receives sufficient income from an IRA to cover monthly shortfall without incurring a 10% penalty

• Keeps a significant portion of her assets potentially growing

• May be able to minimize the income tax impact of unneeded 72(t) distributions if she finds a new job

By choosing to roll over her 401(k) assets into an IRA, split the accounts and take 72(t) distributions from one of them, Louise:

• Receives sufficient income from an IRA to cover monthly shortfall without incurring a 10% penalty

• Keeps a significant portion of her assets potentially growing

• May be able to minimize the income tax impact of unneeded 72(t) distributions if she finds a new job

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OppenheimerFunds Can HelpOppenheimerFunds Can Help

• OppenheimerFunds can facilitate 72(t) distributions, consolidations and rollovers

• IRA Resource Center

• oppenheimerfunds.com

• Solid investment options

• OppenheimerFunds can facilitate 72(t) distributions, consolidations and rollovers

• IRA Resource Center

• oppenheimerfunds.com

• Solid investment options

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Next StepsNext Steps

Schedule a meeting with me or another financial advisor, who can determine whether 72(t) distributions are right for you.

Schedule a meeting with me or another financial advisor, who can determine whether 72(t) distributions are right for you.

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Your TurnYour Turn

Questions?Questions?

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DisclaimersDisclaimers


This material is provided for general and educational purposes only, and is not intended to provide legal, tax or investment advice, or for use to avoid penalties that may be imposed under U.S. federal tax laws. Contact your attorney or other advisor regarding your specific legal, investment or tax situation.

Before investing in any of the Oppenheimer funds, investors should carefully consider a fund’s investment objectives, risks, charges and expenses. Fund prospectuses and, if available, summary prospectuses contain this and other information about the funds, and may be obtained by asking your financial advisor, visiting our website at oppenheimerfunds.com or calling us at 1.800.CALL OPP (225.5677). Read prospectuses and, if available, summary prospectuses carefully before investing.

Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.Two World Financial Center, 225 Liberty Street, New York, NY 10281-1008© 2010 OppenheimerFunds Distributor, Inc. All rights reserved.RE0000.284.0810 September 7, 2010


This material is provided for general and educational purposes only, and is not intended to provide legal, tax or investment advice, or for use to avoid penalties that may be imposed under U.S. federal tax laws. Contact your attorney or other advisor regarding your specific legal, investment or tax situation.

Before investing in any of the Oppenheimer funds, investors should carefully consider a fund’s investment objectives, risks, charges and expenses. Fund prospectuses and, if available, summary prospectuses contain this and other information about the funds, and may be obtained by asking your financial advisor, visiting our website at oppenheimerfunds.com or calling us at 1.800.CALL OPP (225.5677). Read prospectuses and, if available, summary prospectuses carefully before investing.

Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.Two World Financial Center, 225 Liberty Street, New York, NY 10281-1008© 2010 OppenheimerFunds Distributor, Inc. All rights reserved.RE0000.284.0810 September 7, 2010

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Thank You.Thank You.

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