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SEPP IRA Conversion to Brokerage IRA Same Trustee

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ByRoy M

L1: SEPP IRA Conversion to Brokerage IRA Same TrusteeI want to add brokerage account access to my existing IRA with a SEPP. I am waiting out my last year to meet the 5 year rule and I am over age 59 1/2. I assume this transaction would not break my SEPP. I am just trying to diversify from mutual fund only to individual equities. Am I correct in my assumption, or should I wait until my SEPP is over to do this?2010-03-23 18:02, By: Roy M, IP: [71.223.201.247]
L2: SEPP IRA Conversion to Brokerage IRA Same TrusteeIt will not bust your SEPP, however with many firms it will create additional account numbers and partial transfers. Partial transfers have resulted in problems for a very small number of SEPP participants in the past and resulted in some inconsistent IRS rulings in this area. So if separate account numbers will be created ( eg Vanguard account platform) and you have only a few months to go, I would be inclined to wait until after your modification date. If you funds are not properly diversified, you can still accomplish that by exchanging into other funds, in many cases at no commission. If the fund expenses are a problem, you can go to index funds instead of active funds.Otherwise, if you still perceive a benefit from a brokerage account, you might switch everything to that one account and then you would not have a partial transfer, but a complete transfer. And if that did not work either, note that the your risk is extremely small even for partial transfers. You might check PLR 2007 20023 in PLRs of interest on this site to see what I mean by inconsistent rulings.2010-03-23 23:43, By: Alan S., IP: [24.116.165.60]

L3: SEPP IRA Conversion to Brokerage IRA Same TrusteeThanks. I thought it might have some risk since Vanguard did say they would create new subaccount numbers under the existing account. I’m too close to the end of the SEPP to take the chance now. I guess I can wait until after my 5 years expires in January 2011.2010-03-24 15:51, By: Roy M, IP: [71.223.201.247]

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