rollover from TSA
Client has TSA with $140,000. He is 58 1/2 and retired. we are going to rollover $112,000 and leave $28,000 in the TSA.
We are setting up a distribution from the TSA to him for 3yrs @ $777.77 per month so he doesn’t have to take out the 72t.
my question is: if he decides before or after 59 1/2 that he doesn;t want to do the plan with the TSA and just roll the rest of it into the IRA that we setup……do we have to wait a year for another rollover per IRS rules or is that just on the money we rolled over to the IRA?
Any help would be appreciated.
Thank you so much,
Doug
Permalink Submitted by mk foss on Tue, 2008-10-21 21:31
The terminology went it comes to retirement plans can be very confusing. When you have funds wire transferred from a qualified plan, or 403b annuity to an IRA – it’s called a rollover even though the participant never had access to the funds. When funds are wire transferred from one IRA to another IRA, it’s called a transfer. You can do any number of transfers without violating the 60-day or once per year rule. When it comes to IRAs, a rollover occurs when the IRA owner actually receives the funds. In that case, there is a 60-day limit and a once per year rule.
But the important factor is that the 60-day and once per year rule only applies to IRAs. Its Code Section 408(d)(3)(B).
Permalink Submitted by charles lore on Thu, 2008-10-23 01:27
I’m trying to understand your strategy. If you leave 28m in 403b and take out 777/ month he will pay tax and until 59 1/2 pay penalty.
If you roll the 28m to ira along with the rest of money he also pays the tax and penalty. Since the intent is to take the payments for 36 months there is no contemplation or need to do a 60 day roll over. That benefit the ira gives you that the 403b does not is a mute point.
So my question is …what benefit is there to leaving the 28m piece in the tsa that cant be achieved by putting it in irs?
Permalink Submitted by Al Fry on Thu, 2008-10-23 02:37
There would be no penalty on the TSA if he retired after age 55.
Permalink Submitted by Alan Spross on Thu, 2008-10-23 02:42
Perhaps he separated from service at 55 and can take penalty free distributions directly from the TSA. That would avoid the longer and more stringent 72t (SEPP) plan with it’s risk of retroactive penalty if the plan is busted.
Permalink Submitted by charles lore on Thu, 2008-10-23 03:47
True but age 55 exception was not in fact pattern. Maybe dsecurities can answer that question.