72t Bust Question
L1: 72t Bust QuestionHave established a 72t for my wife who recently retired. Used two of her IRAs toestablish dollar amount to determine her distribution. Morgan Stanley advisor isstarting to invest her monies that have been setting in cash. One investment choiceis investing $100k with another money manager (company). This will require creatinga third IRA account number, but the monies will still be part of the original moniesused to create 72t. Will establishing a third account bust her 72t?
Appreciate your input.2008-06-24 10:44, By: RetiredGene, IP: [220.127.116.11]
L2: 72t Bust QuestionThis partial transfer will “probably” not bust the 72t, but we cannot be totally sure since PLR 2007 20023 resulted in exactly that. Nontheless, there has been no IRS explanation for this ruling and no evidence that other plans are being busted when there have been thousands of these transfers done. She may still want to proceed but should at least be aware of this rather bizarre ruling.2008-06-24 16:34, By: Alan S., IP: [18.104.22.168]
L2: 72t Bust QuestionAlan,
Follow up question to original question.
The above mentioned two IRAs were used to determine amount for distributionand has been submitted to Morgan Stanley. However, the first distribution isscheduled for July 6, 2008. If the third IRA is set up prior to first distributiondoes this bust plan? Technically, 72t does not start until first distribution-Correct?
Thanks2008-06-25 07:21, By: RetiredGene, IP: [22.214.171.124]
L2: 72t Bust QuestionThe starting date for a 72(t) plan is the date of the first distribution. That”s why you want to have all of your funds setup in the accounts you want BEFORE making the first distribution.
I strongly suggest that if you want to setup the third IRA account that you delay starting your distributions. You probably do not have time to open the new account and completeall of the transfer actions prior to your scheduled start date. Work with your advisor on this one.
Jim2008-06-25 07:48, By: Jim, IP: [126.96.36.199]