Buying/selling within SEPP IRA
L1: Buying/selling within SEPP IRAHello, I am looking to verify that there is no problem with buying/selling securities within an IRA once the SEPP plan has started. I understand that I never want to change the distribution amount. So many resources generically say that you should never make *any* changes to the IRA. But I don’t see anything in the rules that forbid buying or selling within the IRA.2016-12-10 18:10, By: DJD, IP: [220.127.116.11]
L2: Buying/selling within SEPP IRAYou can buy and sell securities in your SEPP account as much as you like and it has no effect on the plan.
What you cannot do is make contributions to a SEPP account (unless a rollover from another IRA that is also part of the sameplan) or take a distribution that exceeds the amount of the SEPP calculation.
That said, there have been quite a few posts where an insurance agent convinced a SEPP participant to do a partial or full rollover into an IRA annuity. While partial transfers are problematic anyway, having an annuity with surrender charges and a new account number generating a 1099R just adds complexity and risk to the plan and increases the chance of an IRS inquiry.2016-12-10 18:48, By: Alan S, IP: [18.104.22.168]
L3: Buying/selling within SEPP IRAIn addition to partial transfers being problematic, there is a more important new rule.
You can make only ONE “rollover” during any 365 day period involving ALL of your IRA accounts, and this is not limited to SEPP 72-T IRA accounts. You are allowed to make unlimited “trustee-to-trustee electronic TRANSFERS” involved with IRA accounts in general under this latter rule, but not under the SEPP 72-T “partial transfer” rules.
The importance of these rules for this website is the fact that if you are unhappy with the performance of your broker, or want to “diversify” into having more than 1 broker, BE VERY CAREFUL and consult with a QUALIFIED EXPERIENCED PROFESSIONAL FINANCIAL PLANNER OR BROKER, OR TAX ACCOUNTANT about the proper way to do it. To be safe in that situation, I would suggest transferring your entire account, because you cannot transfer part of an account now and another part within the next 12 months. (STUPID COURT DECISION, not an IRS ruling, but IRS is now required to enforce it.)2016-12-10 21:29, By: dlzallestaxes, IP: [22.214.171.124]
L4: Buying/selling within SEPP IRAWhy do you say BE VERY CAREFUL and consult with a QUALIFIED EXPERIENCED PROFESSIONAL FINANCIAL PLANNER OR BROKER, OR TAX ACCOUNTANT about theproper way to do it? I thought the proper way to do it was to direct transfer the entireIRA from one custodian to the new custodian and as long as the custodian sends you a 1099-R at the end of the year, that’s it. I do know about the code on line 7 and form 5329 you must fill out along with your taxes. What else is there to do? I’m sure there are papers to sign to release the IRA and for the new custodian to manage it.2016-12-15 22:45, By: Dee, IP: [126.96.36.199]
L5: Buying/selling within SEPP IRADirect electronic transfers are no problem. Transferring an entire account is no problem.
If you have multiple IRA accounts, at the same broker or different brokers, or if you want to transfer part or all of an account to multiple brokers, WITHIN 365 DAYS (which covers 2 calendar years), you can inadvertently violate this new (stupid) court decision.2016-12-15 22:55, By: dlzallestaxes, IP: [188.8.131.52]