Re: 72t Early withdrawl strategy for career transi
Regarding 72t,
Is there any difference between a "traditional IRA" and a "rollover IRA"? Does the IRS treat them differently for the plenalty free withdrawals?
I am CONFUSED
I don't believe there is any difference in 72(t) withdrawals.
I am not even sure if "rollover IRA" is an IRS term or just a term the investment companies use.
If I recall correctly, there is an issue with comingling certain contributions (nondeductible?) that would prevent you from rolling an IRA back into a qualified retirement plan (401(k), 403(b), 457, etc.). But if you roll into a "rollover" IRA and don't mix the funds with other contributions I believe you can later roll that IRA into a new employer's 401(k) or similar plan. (I'm not sure why anyone would want to, though; perhaps if you retire between 55 and 59 1/2 it has advantages.)
It's been 3 or 4 years since I read into all this, so I may have my facts mixed up.
. . .
I'm using
this Google search to check a couple of things. Page 25 of IRS pub 590 describes using an IRA as a conduit of assets from one retirement plan to another and calls it a "conduit IRA", and no
contributions may be mixed with the plan assets if it is to remain eligible for rolling into another retirement plan.
1992's Form 5498 had a box for "Rollover IRA Contributions", but I don't see the term anywhere else in the IRS site.
So my hastily-researched conclusion is that "rollover IRA" is an investment company's term for a conduit IRA which is nothing other than an IRA with assets rolled over from a qualified retirement plan, and as long as you don't mix that money with other assets you are eligible to roll it into another qualified plan (401(k), etc).
I don't see that it has any bearing on 72(t) withdrawals if you leave it as an IRA. I hope not, as this is
my early retierement plan. I researched this 3 or 4 years ago and convinced myself that I could...I just don't remember all the details at the moment.