Transferring Accounts during the SEPP

L1: Transferring Accounts during the SEPPI have SEPP”s going on an IRA and on a Non-Qulaified Variable Annuity. My question is can I do a “complete” tranfer of the IRA to another custodian and a 1035 Exchange of the Annuity to a diffentent insurance company long as the yearly withdrawal amounts remain the same?I always though this was ok but a recent post said transfers are not allowed once the plan is started. I know partial transfers are problematic if not outright banned.
Thanks in advance2007-07-08 17:45, By: BergW, IP: [67.190.117.51]

L2: Transferring Accounts during the SEPPUntil PLR 2007 20023 can be put in perspective, I recommend passing on any transfers under either 72t or 72q. The risk-reward just does not warrant the move barring some extreme situation. Reading the PLR, while it deals with a partial transfer as a bust, and came as a total shock, it is not clear to me that the same thinking might prevail on total transfers. Given the amount of 72t transfers outstanding since inception dates, this is quite disconcerting. I believe that Bill Stecker has asked the IRS for further guidance on this, so my opinion is to give this some more time.2007-07-09 14:16, By: Alan S., IP: [24.116.66.98]

L2: Transferring Accounts during the SEPPHi Alan S,

Given your previous response, I’m really concerned. What you are saying is that if I want to transfer my entire IRA account balance that is being used for a 72T from Fidelity for example to TD Ameritrade or some other qualified custodian because I’m not happy with my investment choices or the fee structure with Fidelity than I might get in trouble with the IRS. I find this really difficult to believe. I am aware of previous postings about PLR 2007 20023 and that Bill S. has made an inquiry with the IRS, but is there anything else us mere mortals can do other than wait? I would like to think that some of the brokerage houses would not be in favor of this possible chilling effect as it would restrict getting new accounts from 72T folks.

Thanks,
Don2007-07-09 17:19, By: Dond, IP: [24.32.37.113]

L2: Transferring Accounts during the SEPPI am also very concerned if transfers between custodians are considered “busts” because I have made several transfers of my 72t and 72q in the past. I”m about 6 years into my SEPP”S with almost 6 years to go. If I found out they busted because I transferred those accounts I”d have a huuuuuuuge tax bill. I hope we find out that is not true.
I must be missing something but I just read PLR2007 20023, I don”t see anything that addresses this issue. It deals with getting an extra distribution in one year due to a custodian error.2007-07-09 17:48, By: BergW, IP: [67.190.117.51]

L2: Transferring Accounts during the SEPPYou might be reading the wrong PLR. 200720023 ruled that the very first IRA transfer back in 1999 busted his 72t. The attempt to transfer amounts back to the first IRA several years later was immaterial to their decision. Moreover, the plans involved were basic TIRA accounts, therefore the decision was not affected by concern for a change of type of retirement plan (eg a 401k 72t transferred to an IRA).
Probably only a handful of 72t participants know about this PLR, so hopefully it will be resolved before it creates too many ulcers.2007-07-09 19:09, By: Alan S., IP: [24.116.66.98]

L2: Transferring Accounts during the SEPPAssume someone has a 72t that includes IRA balances held at multiple custodians but theyare taking the distribution from one of the custodians. Then, assume that one runs low on funds so they start taking the distribution from one of theother accounts at a different custodian. Is this acceptable as long as all accounts were documented as being included in the initial calculation and the same amount is taken every year? In this situation you wouldn”t have to transfer funds from one custodian to another but it would involve asking the 2nd custodian to start a 72t midstream so I”m sure they wouldn”t code it as such.2007-07-09 19:49, By: carol, IP: [71.200.69.230]

L2: Transferring Accounts during the SEPPAlan S
I did find and read the correct PLR. Hopefully that PLR rulingresulted from the “partial transfer” and not simply because there was a trustee to trustee transfer. Now I think I”m gettingan ulcer.
Thanks, I think

2007-07-09 20:18, By: BergW, IP: [67.190.117.51]

L2: Transferring Accounts during the SEPPHi,

I’m sort of in the same boat as Carol. I have three IRA accounts that make up my 72T universe and take distributions only from one account. The other two accounts were transferred to anther custodian and then one of the two accounts was transferred to a third custodian. I transfer dividends from the two accounts back to third account in order to keep the account where I take 72T distributions in the black. So basically I started with three accounts with one custodian and now I have three accounts and three custodians. Am I in trouble with PLR 200720023?
Dond2007-07-09 20:41, By: dond, IP: [24.32.37.113]

L2: Transferring Accounts during the SEPPI will defer to TheBadger for a definitive word on what works within the tax code for 72(t) rules, but I will toss out a couple of ideas.
I think Carol is OK with her situation. It”s pretty well established that within a multiple account SEPP universe you can make withdrawals from one or all accounts to get your annual amount. You just can”t add new money to or take extra money from any accounts within the universe. So, Carol, when you run out of money in the one account, simply begin withdrawals from the other account. You won”t be “starting a new 72(t)” since your multiple accounts comprise your SEPP universe and you will be getting a “Code 1″ and filling Form 5329 (I hope I got the form number right).
In Dond”s case, I”ve never been comfortable with the process oftransferring dividends and Cap Gains from one account to another at a different custodian but within the SEPP universe. The problem I see is making sure the custodians code these multiple money moves as “transfers” and not “contributions” and “distributions.” I think that if anything has the potential for causing a “bust,” especiallyin light of this new PLR, I”m afraid this process is a good candidate.
Jim2007-07-10 11:16, By: Jim, IP: [24.252.195.14]

L2: Transferring Accounts during the SEPPHi Jim,

Thanks for the feedback. As a follow up question if I carefully watch and verify that the dividends (there are no Cap gains) are indeed transferred and not a distribution do you think there is still a problem? My 72T plan is now 17 months old and I have only received 1099s for distributions from the one custodian even though I have made 3 dividend transfers from the other custodians. Also since the accounts were transferred in full and not partials is there still a problem with PLR 200720023?

Thanks,
Dond2007-07-10 12:12, By: dond, IP: [24.32.37.113]

L3: Transferring Accounts during the SEPPGreetings, An existing SEPP is in place with one IRA. Can a partial transfer take place toa second IRA if the amortized payments continue from the origional IRA? The second IRA would have no distributions.
Thanks for your help.2007-09-10 13:40, By: Chris, IP: [12.108.42.193]