72t

Submitted by John Henderson on Tue, 2017-01-31 17:43

I’m looking to transfer/rollover 5 separate IRAs to another advisor/broker dealer. I am currently using all 5 IRAs to calculate my 72t payment. However I am only withdrawing money from 1 account and have been taking equal monthly payments over the last 10 years.

Can I transfer without busting the 72t?
Is changing investment considered busting a 72t?
What would I base my 72t calculation of off.

Within the IRA their is a deferred annuity that is used as part of the calculation. Does that IRA annuity need to be with the new custodian when the IRAs are transferred?

I.E. Company A (current company) is custodian for all investment and annuity. Company Z (new company) can only be custodian for annuity and uses Pershing for other investment.

If company Z can’t be custodian of all account including the deferred annuity does that bust the 72t? even if money is not being pulled from that annuity IRA?

Thanks



Submitted by Alan - IRA critic on Tue, 2017-01-31 18:33

  • There is a risk of busting the plan in doing partial transfers, so you should plan to transfer all 5 accounts. You must use non reportable direct transfers because you are only allowed one 60 day rollover per 12 month period and you should transfer all these accounts at the same time. Be sure you transfer all accounts you included in your initial balance for calculating the 72t distribution. You could combine the 5 into a lesser number if you want to.
  • Changing investments does not affect the 72t plan. You should probably avoid any annuitized product at this stage. A deferred annuity is OK. You are 10 years in and probably not far short of age 59.5. Obviously, if you bust the plan now the retroactive penalty will be 5 times higher than if you busted the plan after only 2 years, so the closer you get to the end of your plan, the less risk you should take.
  • You do not do another calculation unless you used the RMD method. And you did not use the RMD method.
  • If you transfer all 5 accounts, they do not have to be to the same custodian so any funds intended for an annuity will probably have to be transferred to an insurance company custodian. Your future 72t distributions do not have to all come from a single account, but it would eliminate coordination of distributions and the risk that entails if you could continue to meet the requirement from just one account. Remember, that the total of all 1099R forms you receive on SEPP accounts must be identical from one year to the next.


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