L1: 72t Hello,
If I set up 2 IRA accounts and only use 1 for the 72t distribution and take money out of the second account will that have any affect on the 72t account. I understand the 2nd IRA would have a 10% penalty (if funds are withdrawn), but I want to make sure that the 72t account would not be tainted by the withdrawal (from the second IRA) as long as that account is not touched.
First Dist. 5/1/15
Mac2015-02-13 21:43, By: Mac, IP: [22.214.171.124]
L2: 72t The key is what account(s) balances are used in the calculation of the SEPP 72-T plan, whether you take distributions from one or several plans included in the SEPP 72-T UNIVERSE.
Sometimes there are multiple plans, but withdrawals come from only one of them, such as when funds are tied up in Annuities, CDs, or other fixed investments with maturities.2015-02-13 21:48, By: dlzallestaxes, IP: [126.96.36.199]
L2: 72t As long as the non SEPP IRA account is not associated with the plan in any way such as being used for the SEPP plan account balance or had funds transferred between the SEPP and non SEPP account, distributions from that IRA have no affect on the plan. In fact, the non SEPP IRA account is recommended for emergency needs or even to start a second SEPP plan later on if necessary. But don’t assume that all distributions from the other IRA will be subject to penalty. There are many penalty exceptions and some of the emergencies might be medical in nature and using the medical exceptions could shield these distributions from penalty. You would just need to use Code 12 on the 5329 and explain that exception 02 applies to the SEPP account distributions and a different exception code applies to some portion of the non SEPP distributions.2015-02-14 00:23, By: Alan S, IP: [188.8.131.52]