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What is the process to apply for a 72T??

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Bymikemcsw

L1: What is the process to apply for a 72T??

Date of Birth? 01/28/1959

I am 56 and thinking retiring this month.
I have 150K in my 401K(#1) and 88K in IRA(#2) (plus other assets and savings).
I want to pull 20K out of my 401K (#1) leaving $130K to rollover to a new IRA (#3)
Can I take $20K from IRA(#2) and put in IRA (#3) for a total of 150K ?
1.What is the first step in applying for the 72T for IRA(#3)?
2. Can I start the 72T distributions any time i want? If i create the IRA(#3) OCT 2015, can I get the 1st distribution in NOV of 2016?
NOTE: I know i would have to do the same withdrawals for 5 years.
2015-10-13 03:50, By: mikemcsw, IP: [76.176.144.216]

L2: What is the process to apply for a 72T??Because you will qualify for the age 55 separation penalty exception for distributions taken directly from the 401k, there is no need for a 72t plan. The only requirement for this to work properly is that your 401k plan mustallow you to take flexible distributions from the plan each year until you reach 59.5. If your plan required you to take a lump sum distribution, then all that income in a single year would probably increase your tax rate for that year (and for 2015 you also have wages for 10 months in addition) and offset the benefit of having no penalty on the distribution. Therefore, the first step is to check with the plan administrator to see if you can take flexible distributions from the plan. You will then avoid the rigid requirements and risks involved with a 72t plan.
As for your questions should the plan restrict your distributions, you can do the direct rollover and then do a direct transfer to get 150k into an IRA account to use for a 72t plan. The 20k plan distribution would be penalty free under the separation at 55(or later)rule.150k would be your account IRA balance on which to calculate your distribution. You can start distributions as soon as you have your IRA balance and complete your calculations which should be clearly documented per suggested worksheet on this site (note that 150k will generate an annual distribution of roughly 7k at today’s low interest rate. Also check the “planning pointers” on this site.
2015-10-13 18:40, By: Alan S, IP: [160.3.87.235]

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