72t Partial Transfer

L1: 72t Partial Transfer

Friends, I have a similar situation to Ron”s but with a twist. I am 59 (on 9-9-2006) and I have an IRA with Investment Company A that is in a 72t distribution since 1-30-2000. I wish to transfer the bulk of my account to Company B but leave $1,500 with Investment Company A (because there is a substantial death benefit which would be kept if the contract remained in force with Company A). So can I make a partial transfer?
Incidently, an IRS representative told me that all payments had to be substantially equal so I can”t take a distribution now (for November and December payments) for the remainder of the year in order to prepare for the transfer (like the advice that was given to Ron), is this true? It didn”t sound like she knew what she was talking about.
Also, when may I deactivate the 72T program altogether: at 59 1/2 (immediately after 3-9-2007) or at the end of the year upon reaching 59 1/2 (12-31-06), or thereafter?
Lastly, does the IRS code have anything on the above and if so, where exactly is it?
Please disregard my other posting (sorry, I posted under Ron”s Question as well) and answer here. I think this is a fairly unusual and interesting situation. Others may be able to ease their losses (to their estate at least) in that horrible market we had utilizing this strategy. Many variable annuities have this feature.
Thanks,
Code38

Edit2006-11-02 21:49, By: code38, IP: [24.26.250.84]

L2: 72t Partial TransferI wish to transfer the bulk of my account to Company B but leave $1,500 with Investment Company A (because there is a substantial death benefit which would be kept if the contract remained in force with Company A). So can I make a partial transfer?
Yes you can make a partial transfer. From your description, you have a Variable Annuity with a DB significantly higher than the market value of th contract. Before you make this move, determine if your DB reduces “dollar-for-dollar” and NOT “proportionally.” If D for D, then OK; but if proportionally it won”t work as well as you expect. Also, if you still have this situation by the time you hit your Required Beginning Date for taking RMD”s (April 1 of the year after you turn 70 1/2), then the difference between Market Value and DB could affect the amount of required distribution … also assuming current law. Check the annual fee charged by the VA. Usually if the MV falls below about $50k, they start charging an annual fee of $30 plus. You might need to leave more in the old VA to cover this fee over the years.
Incidently, an IRS representative told me that all payments had to be substantially equal so I can”t take a distribution now (for November and December payments) for the remainder of the year in order to prepare for the transfer (like the advice that was given to Ron), is this true? It didn”t sound like she knew what she was talking about.
You”re right. She doesn”t know what she”s talking about.
Also, when may I deactivate the 72T program altogether: at 59 1/2 (immediately after 3-9-2007) or at the end of the year upon reaching 59 1/2 (12-31-06), or thereafter?
You must satisfy both 5-years (in days) of distributions and actual age 59 1/2. Use the calculator on this site to determine the exact date for termination. You might want to extend a little beyond that date just for good measures.
Lastly, does the IRS code have anything on the above and if so, where exactly is it?
Study IRS Pub 590 several times to get the hang on IRS writing. It is based on the Code and I feel you will get more useful information from that than the actual code, unless you are a lawyer. If you are a lawyer, then you should know how to find it better than we do. (That”s my bad joke for the day.) Use Pub 590.
Please disregard my other posting (sorry, I posted under Ron”s Question as well) and answer here. I think this is a fairly unusual and interesting situation. Others may be able to ease their losses (to their estate at least) in that horrible market we had utilizing this strategy. Many variable annuities have this feature.
Noted.
Jim2006-11-03 10:25, By: Jim, IP: [70.184.2.72]