Rolling from 1 IRA to another after SEPP started
L1: Rolling from 1 IRA to another after SEPP startedI retired 12-1-09 at age 55 (11-20-09). I was able to take my company retirement in a lump sum. It was invested into 2 IRA’s (through 1 IRA MM account). INVA and INVB are both 72T. I started receiving quarterly payments from both investments on 3-1-10. In 2013, I had to get new financial planners and they had me roll over INVB to a new company INVC to get better returns – and still set it up as IRA – 72T. I receive the SAME amt to the penny from INVC and on the same payout schedule.
Question 1 – did any IRS rules get violated by doing this?
Question 2 – will my 5 yr end date still be 3-1-2015 from INVC as it was with INVB. 2014-08-15 16:30, By: Sunshine, IP: [184.108.40.206]
L2: Rolling from 1 IRA to another after SEPP startedBe careful about your terminology. If it went electronically from one institution to another, it is called a “trustee-to-trustee TRANSFER”, which is the best and correct way to do it.
However, if there was a check written to you, and you endorsed that check, or deposited it in your own checking/mm account, and then deposited either of them into the new account, then that is called a ROLLOVER.
If you did a “ROLLOVER”, then you cannot do another “rollover” from EITHER account until > 1 year after that first one, because of a new court ruling. So, the date of that 2013 transaction would be critical.
If you did a “TRANSFER”, THEN THERE IS NO SUCH RESTRICTION.2014-08-15 16:41, By: dlzallestaxes, IP: [220.127.116.11]
L3: Rolling from 1 IRA to another after SEPP startedSince 72t distributions started at the same time, you probably have just one SEPP plan that incorporates 2 IRA accounts. If so, you did a partial transfer to a new IRA (full transfer of one IRA, but partial as respects the overall SEPP Plan). This has caused problems in a couple cases, but the odds are very high that you will not have a problem as long as the correct annual distribution is taken. You probably have to file a 5329 to claim the penalty exception code 02.
Your SEPP still terminates on 3/1/2015 as rollovers and transfers do not affect the SEPP modification (termination) date. You would take 2 monthly distributions in 2015 prior to3/1which will bring your total to 60 for the plan.
If you actually set up separate SEPP plans for each IRA, then you did a full transfer instead of a partial, and that is preferable.
As dlz indicated, be very careful regarding the timing of any indirect 60 day rollovers in the future, as IRS enforcement of one rollover in total for all your accountsper 12 month period starts 1/1/2015. Until that time, you are allowed one per IRA account.
2014-08-15 17:42, By: Alan S, IP: [18.104.22.168]
L3: Rolling from 1 IRA to another after SEPP startedThank you. This would have been a transfer (partial) then as it was electronically transferred. We had worked with our original financial planners for several years and trusted / liked them. After the downslide in 2008-2010 they were no longer available to us. Upon switching investors I began to learn our first investors had not informed us of many things, like how the SEPP was calculated or the 5 yr restriction. My fault – my ignorance. I know my current team worked hard to make sure the new disbursements were exact to the penny of the previous one. To this point, I am pretty sure I have filed everything correctly with the IRS.
2014-08-15 19:25, By: sunshine, IP: [22.214.171.124]