72t From a Rollover IRA
L1: 72t From a Rollover IRA
I just transfered money into a new brokerage account to set up a 72t. The money went into a Rollover IRA account not a Traditional IRA account. Will I have any problem with the 72t withdrawal from the Rollover IRA account?
2011-12-29 11:47, By: MikeK, IP: [126.96.36.199]
L2: 72t From a Rollover IRA
A rollover IRA is a traditional IRA that only contains rollover funds. You will have no problem as long as you properly setup the SEPP.
2011-12-29 12:32, By: Gfw, IP: [188.8.131.52]
L3: 72t From a Rollover IRA
I believe that the only reason for a “Rollover IRA” account was to preserve the ability to eventually roll the IRA back into a retirement plan (401-K) at another employer, if permitted by the new employer.
The use of a rollover IRA account for that purpose has become increasingly decreasing.
Otherwise, gfw is technically correct. However, I do not think that it would be possible to roll it over until the SEPP 72-T has terminated. The chances of getting a new job after 59 1/2 are minimal in this economy.
2011-12-29 15:00, By: dlzallestaxes, IP: [184.108.40.206]
L4: 72t From a Rollover IRA
While it does not affect the SEPP plan, having an IRA titled as a rollover IRA may have benefits if you live in a state that does not fully protect IRA accounts and you later have financial problems and have to file bankruptcy.
In that situation, there is no dollar limit on the amount of the IRA exempted from the bankruptcy. Conversely, contributary IRA accounts (not rollover IRAs) are limited to 1million exempted plus inflation adjustments.
Therefore, showing “rollover” for the IRA has no downsides and MAY have some benefits with respect to later employer plan rollovers or better protection in bankruptcy.
2011-12-29 19:17, By: Alan S., IP: [220.127.116.11]
L5: 72t From a Rollover IRA
The original posting did not mention where it was being transferred from, nor if he was > 55 and “separated from service” in 2011.
2011-12-29 19:31, By: dlzallestaxes, IP: [18.104.22.168]