401k Vs IRA

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L1: 401k Vs IRAI was just talking to T Rowe Price and they inform me that I would have to move my 401kaccount to an IRA inorder to receive72t distributions. The 401kplan allows annual, four times per year, or monthly withdrawals. Doesn”t 72t apply equally to both IRA and 401K plans? Since the plan allows distributions other than the whole amount why would they say I would have to roll it over to an IRA? They don”t seem to understand 72t very well or I”m misinformed.2006-12-05 10:41, By: Rick H, IP: [148.78.243.122]
L2: 401k Vs IRAHello Rick:
TRP is 100% wrong. As long as your plan provides for some form of periodic distributions; then you may launch your SEPP plan from your 401(k) plan; all on the presumption that you have separated from service.
TheBadger
wjstecker@wispertel.net
2006-12-05 15:36, By: TheBadger, IP: [72.42.67.3]

L2: 401k Vs IRAThanks for the quick answer. I have separated from service as of October 31, 2005 and am planning to start the SEPP in Sept 2007. On further discussion withTRP, theysaid that I can”t annuitize the 401k. But as I said before the plan clearly allows annual, four times a year or monthly distributions. If you take monthly distributions then the amount can NEVER be decreased over your lifetime. If you take distributions annually or four times per year you can take any amount as long as itcomplies with your 72t plan. I talked to three different reps and none of them said that I could do a 72t. Since I can almost guarantee that they will code the 1099R incorrectly what is the number of the federal tax form that I will have to file to bring the plan into compliance? Thanks for your help
2006-12-05 17:05, By: Rick H, IP: [148.78.243.123]

L2: 401k Vs IRAI assume T Rowe Price are the administrators of the 401-k. Try to get to a manager/supervisor, or better yet their legal dept. to get them to intercede, assuming they understand that you can do a 401-k SEPP 72-T.
2006-12-05 19:49, By: dlzallestaxes, IP: [4.175.9.229]

L2: 401k Vs IRAFolks, I finally got thru to someone at TRP who knew what they were talking about. I had to talk to four people to get the answer that I can do a 72t from my TRP 401k and not incur any penalties. The only thing is that because it is a 401k and not an IRA they must withhold the 20% federal taxes. They will also withhold the state taxes and pay them over to the state based on my request. I really didn”t want to have the hassle of rolling over to an IRA as the 401k has real good investment opportunities. Thanks for all your help2006-12-08 05:08, By: Rick H, IP: [148.78.243.123]

L2: 401k Vs IRAWell, they partially knew what they were talking about!
Plan distributions that are not “eligible rollover distributions” are not subject to withholding. A 72t plan distribution is NOT rollover eligible and therefore the withholding is not required. However, the withholding may very well benefit you if you don”t want to pay quarterly estimates or don”t have another source of withholding. But it is NOT mandatory in this instance.
It”s a benefit to get the 1099R exception coding from TRP if you can, but if not just attach a 5329 to your return and claim the exception using Code 02. The real caveat here is that you may not get much help from TRP making sure your calcs are correct as they probably don”t want the liability. Be sure you get the help you need to make sure your #s are correct. 2006-12-09 15:02, By: Alan S., IP: [24.116.66.98]