closing an existing IRA and setting up another

L1: closing an existing IRA and setting up another
Hello all: Here’s my issue. With this news about the government defaulting on their debt, I am of the opinion that should they do that, those of us that have our IRAs in stocks/bonds/mutual funds will be negatively affected. So I was thinking of moving
my IRA into a Cash Reserve IRA to protect my assets. I am currently withdrawing on this existing IRA under the 72t rule. My custodian, Fidelity, informed me that I needed to close out the existing account and open a new IRA as a cash reserve. My concern
is that if I do that, the IRS will consider the closing of the existing IRA as busting my SEPP (72t). Am I correct? In addition, when I open this new “Cash Reserve” account and request withdrawals under the 72t will I be able to use the original calculations
which were the 2009 calculations?
2011-07-21 21:36, By: Rosa, IP: [98.211.184.211]

L2: closing an existing IRA and setting up another
I believe that you can make such a move only once in a 12-month period. So, if the financial/economic situation changes before this time next year, you will be stuck with -0- income and -0- growth for that period.
Your SEPP 72-T annual distributions are based upon your initial calculations and criteria, so that you will have to use principal to make your distributions going forward. You could make the one-time change in method to signiicantly reduce your annual payments,
but will that satisfy your cash needs until you satisfy the 5-year/59 1/2 provisions ?
How much have you withdrawn to date, and therefore how much would the 10% cost be to just bust your plan until you are ready to restart it ?

2011-07-21 22:38, By: dlzallestaxes, IP: [96.227.217.194]

L3: closing an existing IRA and setting up another
Fidelity Cash reserves is just their money market mutual fund. If your IRA is a brokerage account, all you would have to do is sell the current investments and the proceeds would automatically go to your sweep investment, which
would usually be the cash reserves. This would not require a new IRA account number.
And if you do require a new account number because you do not have a brokerage IRA account, you should open the brokerage IRA account and have all the Fidelity IRAs that are part of your SEPP plan directly transferred into it.
Then you would be able to change investments as you please with no further need to set up new accounts. Any current changes would be non reportable direct transfers.
Having a brokerage account is a good idea in any event, but the clowns in Washington are NOT going to default on the debt. What you are seeing now is just political posturing because the way they play the game is to go down to
the last minute. Then they will cave in with their respective positions and do a last minute deal. The markets may drop before that, but will rally back as soon as default is averted. So I would not change my investments over what is essentially politics.
Now if you have investment reasons to get really defensive such as belief we are going into a double dip recession, that is different and you may want to reduce your risk. But I would not do it just because of political gamesmanship in Washington. Further,
if there was ever a default, you could lose money in Cash reserves as well, since the principal is not currently guaranteed under any govt program, and Cash reserves hold short term obligations that would be affected by any default.

2011-07-21 22:56, By: Alan S., IP: [67.61.144.221]

L4: closing an existing IRA and setting up another
Thank you all for your quick response. I quess I was just panicking.. I’ll keep my fingers crossed and hope all will turn out all right! : )
2011-07-22 00:51, By: Rosa, IP: [98.211.184.211]