72T rollovers

You are here:
< Back

L1: 72T rolloversHi, I established a 72T last year and have taken annual distributions for 2006 and 2007. Question is, may I take a further large distribution for 2007 and roll it over within 60 days, either back to the same account or to a new IRA account, without busting the 72T. Will this second distribution for 2007 create any problems?
Thanks, Bob2007-05-07 08:17, By: car-tows, IP: [71.254.80.15]

L2: 72T rolloversInstead of using your SEPP, consider just going to the bank and taking out a short term loan or a home equity loan.
The answer is yes, you can do 60-Day rollover, but you may just be making problems for yourself – don”t forget, rollovers are reports on your 1040 and you mayjust begiving the IRSone more reason to do an audit.
2007-05-08 12:04, By: Gfw, IP: [24.148.85.129]

L2: 72T rolloversIf you just wish to change IRA custodiansand don”t need a short term loan, change by direct trustee transfer, not by rollover. That eliminates the reporting of a distribution and rollover on your return. However, if your current custodian gave you the 02 “exception code” in Box 7 of your 2006 1099R, the transfer gives them a good excuse to change it to an early distribution this year. That would force you to file Form 5329 to claim it. If you are filing 5329 already, then probably not much lost.
A temporary use of funds for 60 days and a rollover is riskier. First, you will have to report it and the IRS gets a 1099R well in excess of the SEPP amount. Although the rollover is not deemed a rollover of a SEPP distribution, this reporting is likely to get the attention of the IRS and can cause an inquiry. The rollover also eliminates that option again for 12 more months, in the event of a greater emergency.
As gfw indicated, it”s not a bust, but still is not a great idea.

2007-05-08 15:31, By: Alan S., IP: [24.116.66.98]

L2: 72T rolloversThanks to all for your detailed advice.
Bob2007-05-09 07:47, By: car-tows, IP: [71.254.80.15]