Changing 72T method and transferring IRA

L1: Changing 72T method and transferring IRAI retired at 51 (in 2000), and have had a 72T – Amortization method – since then, via Investment Company A. I want to change the method to minimum, until I reach 59 1/2. I also am going to transfer my entire IRA to a different Investment Company B. Company B asures me that there is no problem with these type of transfers, but I want to make sure that something in the process won”t bust the 72T. We were going to transfer the IRA first, then deal with the minimum distribution change, once the new investment company had total control. (the IRAcode is 2 on my 1099”s), if that makes any difference). What should be my main concerns, and/or what should I be focused on through this process? 2006-11-01 16:02, By: Ron, IP: [69.242.153.42]
L2: Changing 72T method and transferring IRAHello Ron:
I would focus on two issues:
1. I would accomplish the asset transfer from trustee A to B using a direct trustee-to-trustee transfer mechanism; it is quicker and cleaner than performing a rollover. Your representative at Trustee B will have all of the appropriate forms to accomplish this correctly.
2. If you have any remaining 2006 distributions to make from the IRA (now housed at Trustee A); get them done immediately so that 2006 is completed from a distribution perspective; then perform the transfer; then commence your 2007 distributions with Trustee B.
TheBadger
wjstecker@wispertel.net
2006-11-01 16:28, By: TheBadger, IP: [72.42.67.108]

L2: Changing 72T method and transferring IRARon,
Are you planning the RMD method change for 1/1/07, the concise and easy way ……..or the much more complex late year effective date change in 2006?2006-11-01 20:49, By: Alan S., IP: [24.116.66.98]

L2: Changing 72T method and transferring IRARon,
Depending on the IRA custodians, the direct transfer can take multiple weeks to complete once the paperwork is submitted. I have found the fastest way is to indicate on the direct transfer forms that you wantthe sending IRA custodian to wire the funds to the receiving IRA custodian. It may cost some money, but will speed up the process greatly.Also be aware that in transfering an account to a new custodian may result in multiple transfers due to possible short term interest being paid at the first of the month depending on your investments. I transfered an account from Fidelity investements to Ameritrade in the middle of a month and on the firstof the following month I received a check in my hand for the short term interest (a definite 72T buster)of the transfered account. I had to call up Fidelity and have them cancel the check and then arrange to have the interest sent to Ameritrade.

Good luck,
Don2006-11-01 22:06, By: dond, IP: [24.32.37.113]

L2: Changing 72T method and transferring IRAThanks for all of your comments and advice. That helps tremendously. And Alan, I was planning on the RMD for 2007. Thanks again for the heads up on that.
One more question…..Trustee B wants me to request Trustee A turn everything over to cash, before the transfer. The reason for that is that he has dealt with Trustee A before ontransfers, and some of the investments were highly proprietary, and very difficult to manage on his end, even to transfer those funds to another fund manager. ( Trustee A is Morgan Stanley ) Any input or thoughts on that?
Again, Thank You !!2006-11-02 12:03, By: Ron, IP: [69.242.153.42]

L2: Changing 72T method and transferring IRAMy understanding is that transfering securites takes even longer than cash. If you go the cash route, besides trading fees, you may also be charged a fee if you sell a security before some minimum time of ownership. Don”t think that taxes (short-term captiol gains and such) is an issue.2006-11-02 12:58, By: dond, IP: [24.32.37.113]

L2: Changing 72T method and transferring IRARon:
What is your reason for changing IRA custodians? Do you have problems with the current investment strategy, or do you have problems with the custodian? Were you planning to transfer assets “in kind” from “A” to “B” and keep the current investments,or were you planning to complete the transfer and let “B” liquidate the assets and establish a new investment strategy? My suggestion is that you be sure you have a clear understanding of what the new plan is and that you understand it and agree with it.
Anytime you deal with “propritary products,” you have a problem because, as a general rule, they can only be held by the firm issuing them. Most of the time they must be liquidated before any transfer. If you can transfer them … and there are few that will allow it … then all you can do is liquidate them after the transfer. So this is the reason “B” has told you to sell at “A” and then move all cash.
Like Don said, you may have some CDSC (back-end sales charges) or other liquidation fees to deal with when sell at “A.” Be prepared for new sales charges or CDSC”s, or fees if going into a managed accountwhen “B” sets up your new investments.
Jim2006-11-02 13:33, By: Jim, IP: [70.184.2.72]

L2: Changing 72T method and transferring IRADon, Thanks…I expected that some securities may cost me an early termination fee. I may change my mind, if it”s too much. Surely, they can”t “bluff” me though ??
Jim, I have dealt with Custodian B as long as A, so I understand his strategy, and am pleased with his management of the assets that I have had with him. I”ve become very dis-enchanted with A, because I don”t feel like they watch my portfolio as they should……….too big a company….and you are in a “group”…not as an individual. When you have to call them and tell them to drop Enron or Worldcom, (after their future demise is all over the news) there”s something wrong with their “personal” interest of me. Many other occurrences like that since Enron, too. So even though I really like the custodian as a person, I”ve lost my confidence in him, and the company. They lost 1/3 of my profit sharing dollars after I retired during the 2001 and 2002 disaster, and even though most everyone else lost, that seemed excessive, and I”m still seething about it. Plus, since my $$$ went under their “tier discount”, I have been charged an extra .58%.. Ain”t that a kick in the butt !!! OK, I”m done venting now……

Thanks again……..Ron2006-11-02 17:04, By: Ron, IP: [69.242.153.42]

L2: Changing 72T method and transferring IRAFriends, I have a similar situation with a twist. I am 59 (on 9-9-06) and I have an IRA with Investment Company A that is in a 72T distribution. I wish to transfer the bulk of my account to Company B but leave $1,500 with Investment Company A (because there is a substantial death benefit which would be kept if the contract remained in force with Company A). So can I make a partial transfer?

Also, when may I deactivate the 72T program altogether: at 59 1/2 (3-9-07) or at the end of the year upon reaching 59 1/2 (12-31-06), or thereafter?2006-11-02 18:09, By: code38, IP: [69.155.118.108]

L2: Changing 72T method and transferring IRAGood morning Ron:
Well, it sounds like you have a good case for firing A and moving all to B. If B is using a “fee-based” or “fee-only” account for you, then transferring all cash makes good sense. IfB isa commission account, then look closely to see if any assets at A can be utilized with B and transfer these “in-kind.” Do a good evaluation of your costs to terminate with A. It sounds like you may be better off “bitting the bullet” and eating any costs to make the trnasfer.
Here are my last thoughts. Follow TheBadger”s and Alan”s advise. Complete your 2006 distribution requirements soon and then turn it off at A. If you liquidate all positions at A quickly,then you should be able to get the turstee-to-trustee transfer of all cash completed within 2006. Get things set up at B so they can determine a value 12-31-2006 so you can start your RMD method in 2007. The only hook in this plan is if you want to keep some of the assets at A and move them to B. This could take some time and you may be better off waiting till January, 2007 to start that process so you don”t get stuck with some assets “in transit” and have stray interest, dividends and Cap Gains floating in later. Even if you liquidate a position to cash and make the transfer, if the old account received dividends based on your holding of this position, then you”ll have a transfer from A to B of the dividend. And if the dividend is a stock split, you have a real annoyance to deal with.
Good luck.
Jim2006-11-03 09:37, By: Jim, IP: [70.184.2.72]