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Transfer of funds within 72t “universe”

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Last Updated On
ByJeff

L1: Transfer of funds within 72t “universe”I currently have four IRA accounts and I’m planning to declare all of them to be a 72t “universe”. Once I’ve done that, will I be allowed to transfer funds between these accounts without restriction, as long as I don’t add any new funds from outside this “universe” of accounts?2009-11-16 02:37, By: Jeff, IP: [96.32.75.245]
L2: Transfer of funds within 72t “universe”Yes, you will be able to transfer between the various IRA accounts within your SEPP universe. Do this directly to avoid being hit with the rollover limitation per account. Remember that you must identify all of the accounts included when you start your plan. This should be done on your calculation documention, and you should also make sure your IRA custodians understand that these accounts are part of a 72t plan.2009-11-16 02:52, By: Alan S., IP: [24.116.165.60]

L3: Transfer of funds within 72t “universe”Thanks. One follow-up: what do you mean by “Do this directly to avoid being hit with the rollover limitation per account.” I’m not aware of any rollover limitations.2009-11-16 18:50, By: Jeff, IP: [96.32.75.245]

L4: Transfer of funds within 72t “universe”Each of your IRA accounts is only allowed one indirect rollover per 12 month running period. This limitation applies whether you have a 72t plan or not. Note that this limit applies to both the account that issues the distribution AND the one that receives it. For example, if you have IRA accounts A, B, C, and D and you roll over an amount from A to B, you cannot do another rollover for 12 more months from either A or B. If you did a disallowed rollover, it would be a taxable distribution and would bust your plan if you were not able to readjust the annual distribution to bring it back into compliance with the total amount required.Another advantage of direct transfers is that they are not reported to the IRS and you do not have to report a rollover on your tax return. If you retain your permitted rollover for emergencies, it can help you salvage your plan. For example, if you take out too much due to a math error, and you still have a rollover available, you can use that rollover to replace the funds within 60 days and save your 72t plan. If you have already used up the allowed rollover, you are stuck.2009-11-16 22:26, By: Alan S., IP: [24.116.165.60]

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