moving part of IRA account that is making the 72(t) distribution
L1: moving part of IRA account that is making the 72(t) distributionI started making 72(t) withdrawals last year and chose Fairholme Funds, both because of their outstanding record and their willingness to code the 1099R with a ‘2’. I have 4 four years to go before 59-1/2. I would like to move some of their fund laterally to an IRA in a new Fairholme fund. I will still have way more than a sufficient amount to cover the withdrawals. Is there any problem with doing this?
Thank you.2010-03-10 17:10, By: statmanbill, IP: [18.104.22.168]
L2: moving part of IRA account that is making the 72(t) distributionNO problem, and YES, a problem. It depends what you mean by your posting.1. There is no problem changing investments within a SEPP 72-T. You can change them just as with any IRA. You can even change “custodian” to a different fund group, say Fidelity or Vanguard, but there you have to be careful with partial transfers and trailing dividends or interest.Also, you must do that as a trustee-to-trustee transfer.2. Your comment “have way more that enough to cover withdrawals” may be a problem. The amount of the ANNUAL DISTRIBUTION is a calculation made when you initially set up the plan. It was supposed to be based upon your “SEPP 72-T UNIVERSE”, not some amount that you decided that you wanted to arbitrarily withdraw each year. You can take withdrawals from income, growth, or investment principal. What did you mean by that comment ?2010-03-10 17:44, By: dlzallestaxes, IP: [22.214.171.124]
L3: moving part of IRA account that is making the 72(t) distributionThanks for your reply, and you do have a good question. I should have explained better. I plan on keeping the same absolute dollars withdrawals from the two funds (as from the current one), so would be keeping to my original calculations. I’m hoping this is okay.
Thanks again.2010-03-10 18:09, By: statmanbill, IP: [126.96.36.199]
L4: moving part of IRA account that is making the 72(t) distributionStatmanbill,I have Fairholme Funds (FAIRX) as one ofmanyholdingsin two of myIRA’s, but I did not know that they were a “custodian” that handled IRA’s and SEPP plans. If the holdings are going to be in the same account under one custodian, but just split into two of their funds, the funds may have different #s, but the account# you hold them in should be the same account# to be safe. It would be like the trades that I do within my Vanguard IRA, for example. I don’t think I really understand if they are a custodian of the type I am accustomed to using, such as LPL, Vanguard, or Schwab. Someone else may know. What does Fairholme say to you when you ask them the question about this proposed change, and will they tell you thatyou will still get one 1099-R with code 2 for the combined $ withdrawals?Ken2010-03-10 21:52, By: Ken, IP: [188.8.131.52]