72t and uni-401ks
L1: 72t and uni-401ksI am 46 years old and have beenparticipating in a 72t plan withdrawing monthly dollars for the last four yearsand nowwant (need)totake cash out of the funds I used to establish the 72t. My question: is it possible to move/split the moneyI used to establish the 72t toa uni (sole) 401k enabling me toaccess the funds in the uni401k penalty freewithout busting the 72t? Or is there any other way I can avoid paying the penalty to take cash out ofmy 72t money? Thanks.2008-02-17 06:29, By: jack, IP: [184.108.40.206]
L2: 72t and uni-401ks>>My question: is it possible to move/split the moneyI used to establish the 72t Short answer… No.
Any funds that were used to initiate the SEPP must remain as part of the SEPP. If you remove any funds from the SEPP account – other than the normal distributions – you will bust the SEPP – 10% on all previous distributions, plus interest on past due penalties.
2008-02-17 06:46, By: Gfw, IP: [220.127.116.11]
L2: 72t and uni-401ksBesides, what makes you think that at age 46 you can take withdrawals from a uni-401-k without penalty ???2008-02-17 10:27, By: dlzallestaxes, IP: [18.104.22.168]
L2: 72t and uni-401ksin response to dzallestaxes…I think you can take money out of a uni 401k based on some reading I have done. in essence I was talking about an interested and penalty free loan…Solo 401k loans are permitted. 50% of the assets of the Solo 401k ($50,000 maximum) may be borrowed using a Solo 401k loan. Money is available when needed tax free and penalty free, so the Solo 401k enables immediate tax savings and builds a source of funds that can be tapped in an emergency.
Here”s the link for you to check it out.
http://onepersonk.com/2008-02-18 07:07, By: jack, IP: [22.214.171.124]
L2: 72t and uni-401ksBE CAREFUL. You wil have to repay the loan with AFTER TAX DOLLARS !!!! And you lose the entire benefit of tax-deferred appreciation on the funds in a retirement account.2008-02-18 07:22, By: dlzallestaxes, IP: [126.96.36.199]
L2: 72t and uni-401ksSuch a transfer would be considered a modification under RR 2002-62 with respect to changes of account balance when you transfer the funds to another type of retirement plan. IRA to IRA is OK, but not IRA to an employer plan. You would owe the retroactive penalty for the 4 years and interest for all distributions you took under the 72t IRA account.
With respect to future penalties, if the plan is written to allow loans, you could get access to the funds without penalty, but you still have to fund the loan and interest repayments. If you cannot, then you may end up with a deemed distribution which is again subject to tax and penalty.
Therefore, this looks like a solution only if there is areal big light at the end of the tunnell.
2008-02-18 18:48, By: Alan S., IP: [188.8.131.52]
L2: 72t and uni-401ks> BE CAREFUL. You wil have to repay the loan with AFTER TAX DOLLARS !!!!
Indeed so. And when the repaid loan money is withdrawn later, it will be taxed again as ordinary income thus inflicting double taxation on this money. Not a great plan, IMHO.
Ed2008-02-19 23:35, By: Ed_B, IP: [184.108.40.206]