72T
Once established, the 72T payout. Example 500,000 @ $1290 a month. Can you transfer part of the assets to a SPIA IRA for 100,000 to provide the payout for 6.5 years until 59.5 yrs old. Then Transfer the balance to another or other investments? As long as you keep the SOSEPP the same. That is the $1290 a month.
Permalink Submitted by Alan - IRA critic on Sun, 2015-03-22 16:01
The IRS has busted 72t plans before for partial transfers (PLR 2007 20023), but the odds are good that yours would be OK since thousands of plans that had partial transfers have not been questioned. Still, there is risk when you involve an inflexible product in your 72t plan, which is already very inflexible. The amount reported on the 1099R forms every year must be exactly 15,480, so if you use an SPIA IRA Annuity, be sure to have the checks issued early in the month, so there is time to make any corrections in December if you do not receive the check when scheduled. Also, note that you are now allowed only one rollover TOTAL for all your IRA accounts over a 12 month period, so this restricts the ability to correct errors by rolling distributions that exceed the 72t total back to the IRA or another IRA. Finally, with an SPIA IRA annuity, you forfeit the option of doing the one time switch to the RMD method should you want to reduce your distribution for some reason. In summary, you can do this but it increases the risk of an error that cannot be corrected, so you would have to triple check all transactions, particularly the annuity purchase.