What to do with 72T investment improvements

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L1: What to do with 72T investment improvementsI have a question. Case: Istarted a 72t this month for $400k and I am withdrawing around $1600/month, I am 57 years old.Can you takeany dividend and growth above $400k and move that into a separate IRA (non-72T) to keep them out of the $400k base. For example, lets say the market recovers and I get a $100k improvement in the account, now value is $500k, can we move some of the stocks out to my other IRA, as long as the 72T doesn’t go below $400k?2008-12-11 07:01, By: mcli759, IP: [74.215.109.194]
L2: What to do with 72T investment improvementsNo. Assests allocated to the SEPP, including any gains or losses, remain as part of the SEPP until teh later of Age 59.5 or in your case 5 years.2008-12-11 07:06, By: Gfw, IP: [98.214.144.242]

L2: What to do with 72T investment improvementsThanks that’s what I thought. 2008-12-11 07:08, By: mcli759, IP: [74.215.109.194]

L2: What to do with 72T investment improvementsDid you consider alternatives to locking yourself in for 5 years to a SEPP 72-T ? Did you have any way to get you to 59 1/2 without it, so you wouldn’t be locked in for 5 years ? Was it in a 401-K or employer sponsored retirement plan ? If so, who “advised” you to roll it over to an IRA ?Unfortunately, it’s too late now.2008-12-11 14:25, By: dlzallestaxes, IP: [96.245.168.66]

L3: What to do with 72T investment improvementsThe 401k comment caught my eye as I have been considering taking early retirement in 2009 at age 55. I have a 401k with my current employer. According to the IRS 401k resource guide, if I take distributions after separation from from service ,if the separation occurred during or after the calendar year in which the participant reaches age 55 the 10% penalty will not apply. Depending on the terms of the plan distributions may be: Non periodic, such as lump-sum distributions or periodic, such as annuity or installment payments. Non periodic lump sum means to me different sums at different times and not a complete withdrawal one time. I take this to mean that since there is no penalty the sepp does not apply if you are over 55 and you could treat the 401 like a bank account. My employer is saying I must remove this money from their plan after separation which only leaves a rollover to an IRA and all of these 72t rules. Am I being misinformed or am I misreading something? Thanks2008-12-21 05:36, By: rt, IP: [68.46.156.217]

L4: What to do with 72T investment improvementsEverything you read about the age 55 exemption to the 10% penalty taxis correct.However, youryour 401(k) plan may not allowany option except a total distribution or a rollover. You can review your Summary Plan Description, but your employer does have the right to restrict the options.2008-12-21 08:07, By: Gfw, IP: [127.0.0.1]

L5: What to do with 72T investment improvementsI thought as much. Thanks. I will continue a new question on a new post.2008-12-21 07:41, By: rt, IP: [68.46.156.217]

L2: What to do with 72T investment improvementsIs it really too late? If it is determined that a SEPP is not a good solution, couldn’t he just rollover the $1,600? 2008-12-13 03:49, By: Denise, IP: [64.12.117.196]

L2: What to do with 72T investment improvementsDenise,You are correct. Providing the poster has not used up the one rollover per 12 month period on the 72t IRA account, the distribution of $1,600 could be rolled back to the IRA or into a different IRA and the 72t plan aborted. You are not bound to a 72t account by intent, only by actions. Therefore, this would buy some time to explore other options, if there are any. Only one distribution can be rolled back under the rollover rules, so if automatic distributions are set up for each month, better change that arrangement with the custodian before another distribution is made.2008-12-13 16:38, By: Alan S., IP: [24.116.165.60]