Rollover 401k to Existing SEPP IRA

L1: Rollover 401k to Existing SEPP IRAI have an existing 72t plan which I started taken distributions from in Sept 2004 at age 53. I also use annual recalculation. My question is can I roll additional money from a 401k plan into the SEPP IRA without busting the plan? Also since I”m now age 56, and if I can roll money into the plan, does age 59.5 still work, or does my 5 year period begin again since new money was rolled into the plan. ThanksJoe2007-02-14 17:09, By: Joe, IP: [67.169.13.167]
L2: Rollover 401k to Existing SEPP IRAGood morning Joe. Let”s review your questions and I”ll provide answers:
I have an existing 72t plan which I started taken distributions from in Sept 2004 at age 53. I also use annual recalculation. My question is can I roll additional money from a 401k plan into the SEPP IRA without busting the plan?
Was your K-plan included in your original SEPP Universe to determine your distribution amount? If not, and from your question I suspect it was not included, and you do as you suggest of rolling the K-plan into your SEPP IRA, then you bust the plan. You may not add to or remove funds from the SEPP Universe in a manner which you are suggesting. The only additions can be from income within the investments that comprise the SEPP Universe.
Also since I”m now age 56, and if I can roll money into the plan, does age 59.5 still work, or does my 5 year period begin again since new money was rolled into the plan.
IRS rules state that if you retired or otherwise separated from your company with the K-plan during the year you turned age 55 or older, and you leave the K-plan intact, then you may take distributions without incurring the 10% penalty. Once you transfer from the K-plan to an IRA, you lose this benefit and you are now governed by the IRA rules and age 59 1/2 comes into play. Of course, your K-plan must allow some form of systematic distributions to make this a feasable option. Some plans allow it while others restrict how distributions can be made. You will need to check with the HR Department of your employer to determine if this is a viable option.
If you get forced into or choose to transfer the K-plan to an IRA, then simply leave the original plan alone andstart a new 72(t) distribution plan.There is no limit to the number of SEPP Plans you may have running at one time. JUST DON”T COMBINE THEM INTO ONE ACCOUNT or you get an automatic “BUST.”
Jim2007-02-15 06:06, By: Jim, IP: [70.184.2.72]