New 72t for Wife
L1: New 72t for WifeI currently have a 72t and my wife just retired from AT&T and we are in the process of establishing her a 72t.
Acouple of questions:1. One investment recommendation from our planner is to have a variable deferred annuity from AXA Equitablewithin her IRA as an income producing instrument. Is this type of instrument allowed in a 72t account?
2. She plans to start monthly distributions on July 1, 2008. However, we understand she can take a full yeardistribution by taking a lump sum amount for the first six months of 2008, and the balance monthly for the lastsix months of 2008…is this ok? Also, what would be the effective start date of her 72t…the date she receivesthe lump sum check or the date she starts her monthly distributions?
3. Also, she will use the sum of two IRAs to determine her annual distribution. IRA#1 is extremely large and is where the distribution will come from. Can she still contribute to IRA#2 annually or is this off limits because itwas used to calculate her distribution?
Look forward to your response.
RetiredGene2008-04-22 09:03, By: RetiredGene, IP: [188.8.131.52]
L2: New 72t for WifeHello Gene. Let”s start at the bottom and work up.
3. Any contributions, transfers in or out, or extra withdrawals from an IRA that is part of your SEPP Plan universe will “bust” the plan. Therefore no new contributions to the other IRA that is part of her SEPP Universe.
2. Your wife can take a lump sum distribution for the first 6 months and then start monthly on July 1, 2008 as you have described. HOWEVER, the SEPP Plan start date will be the date the IRA custodian makes the first distribution. Look for this date on your first confirmation of the distribution, not the date you receive the check or the date credited to your checking account.
1. A variable annuity (VA) is an allowed investment for an IRA and I, as a financial planner, have no problem using them. HOWEVER, it depends on how the VA distributions are going to be made will determine how successful your SEPP Plan will be. Furthermore, the options for using a VA are too complicated and well beyond the scope of the discussion here. Annuitization of the VA is not usually a good idea for various reasons. One problem is having the calculated SEPP amount be compatible with the allowed distribution amount from the VA. If you take “periodic, systematic distributions” from the VA and you don”t exceed the “free withdrawal” amounts, then you are OK. But if you “annuitize” the contract, the distribution amounts rarely … haven”t seen it yet … if ever will be compliant with the required SEPP distribution amounts. Since you plan to take the distributions from the large IRA, which I assume you will put into the VA, then I suspect the numbers won”t work. Plan carefully and get more ideas than what you are running on.
Jim2008-04-22 11:14, By: Jim, IP: [184.108.40.206]