How Can We Help?
< Back
You are here:
Print

72t Distributions

Posted
Last Updated On
ByViv

L1: 72t DistributionsI am taking 72t distributions from my IRA & am not 59 1/2 yet.I need to takeextra money out. I am planning to putthe extra moneyback in an IRA annuity within the week. I plan to do thisby a rollover & not atransfer because I need the money faster than a transfer can be done. As long as I have the forms from the sending & receiving institutions will I be safe from pentalties by filing 5329 with my taxes & showing the money going back into an Ira annuity & not being taxable because I really didn’t receive it?2009-03-21 18:33, By: Viv, IP: [216.68.45.95]
L2: 72t DistributionsYou could do that as long as you have not used up your one permitted rollover in the last 12 months. In addition, you will not be able to do another rollover from either IRA account for the next 12 months either, and that results in the loss of your rollover as a safety valve to correct a 72t distribution error.
Your annuity IRA will then become part of your SEPP universe along with what is left of the original IRA account. This increase in activity, accounts and transactions increase the risk of an error that would bust your plan, and that would be very costly. Is this really worth it? I am somewhat concerned with the urgency you cite here as it suggests you are being pressured by an annuity sales person. This is typically not a decision that needs to be made in a hurry, particularly when there is a 72t plan in place.
If this gets executed correctly, you would report both your 72t distribution and the rollover distribution on lines 15 of Form 1040 with “rollover” entered next to 15b. 15a should total the sum of your correct gross 72t distribution plus the amount you rolled over.
2009-03-21 22:28, By: Alan S., IP: [24.116.165.60]

L3: 72t DistributionsThank you for the info. I have decided to wait. You are right it is not worth the risk. Thanks again.2009-03-22 20:25, By: Viv, IP: [216.68.38.164]

L2: 72t DistributionsIn addition to what Allan stated, make sure that you keep really good records.
Make ssure that you check out PLR 200720023. What you are contemplating is in effect a partial transfer of assets from the current IRA to a new IRA. The IRS has frowned on this type of transaction before and you are going to be raising enough red flags that you may get questioned.
2009-03-22 11:57, By: Gfw, IP: [216.80.125.206]

L3: 72t DistributionsThank you for the info about Plr 200720023. It was just what I needed to see to know I am going to wait for now.2009-03-22 20:28, By: Viv, IP: [216.68.38.164]

Table of Contents