Can I stop an existing 72(t), pay 10% penalty on withdrawals, and start a new 72(t)?

Submitted by MICAH TIPTON on Thu, 2023-01-26 20:31

I’m 56 years old. I’m taking income using Rule 72(t) which is attached to two accounts: an IRA (where the funds are being withdrawn from) and a Variable Annuity (IRA).

I don’t want to leave the money at risk and would rather roll it over to a single annuity for principal protection. Then restart the 72(t) to draw income again. I know I will pay a 10% penalty on the withdrawals I’ve already taken.

Penalties aside, is this possible to do?

Or, is there a way to roll the accounts into the annuity and continue the existing 72(t) withdrawals manually?

Thank you.



Submitted by Alan - IRA critic on Fri, 2023-01-27 15:29

  • You can do a direct transfer of the non annuity IRA into a new IRA annuity and continue your current 72t plan distributions from either of your IRA annuities. The only risk would be an IRS agent that makes a rogue interpretation of the IRS Rev rulings that state that “transfers to another retirement plan” would bust the plan. Such a transfer to a non IRA plan would bust the plan, but to another IRA should be OK as long as the current distributions are maintained, and the transfer is made to a new IRA or one that is already part of your plan.
  • Or if you prefer and the amount of your 72t distributions is too low to carry you to 59.5, you could report a busted plan on your 2022 return and pay the retroactive penalty, then start a new 5 year plan this year.


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