72t

L1: 72t My client”s situation is this:
Has 5 IRA accounts all at the same broker dealer. The accounts were separated due to type of account (ie managed, bond, stock, mutual fund etc). All 5 IRA accounts are doing a 72t distribution, apparently all calculated using the amortization method. Client has approximately 1.5 years to go until ending 72t distribution. Looking at past account statements, there has been co-mingling ofmonies with these accounts due to one losing money and them transferring money from another IRA to keep sufficient funds to continue distributions. I want to transfer these accounts over to my firm and want to put them all into one IRA account. Can I combine these IRAs into one and keep the aggregated 72t distribution amount the same as to not trigger a red flag to the IRS? My fear is not doing this properly and causing the client to take a 10% penalty on all of the distributions.
Thanks,
Al2005-10-06 16:10, By: Al, IP: [24.249.155.51]

L2: 72t Hello Al:
It depends on how your client-to-be set up his SEPP plan(s) 3 1/2 years ago. If he created 2,3,4 or 5 separate SEPP plans then NO, you may not combine them; conversely, if he set up jsut 1 SEPP plan encompassing all 5 IRA accounts then YES you may merge them into one account.
You need to get a definitive answer to this question before acting.
TheBadger
wjstecker@wispertel.net
2005-10-06 17:06, By: TheBadger, IP: [66.250.23.21]

L2: 72t Good morning Al. TheBadger is absolutely correct that your first question is to determine which IRA’s constituted the SEPP universe. If all IRA’s are included in the one SEPP plan then it’s OK. But if each IRA is a separate SEPP plan, then your prospective client probably has 5 busted plans and one nightmare of a situation.
If the later situation is correct and if I were you, I would not touch this situation before it is cleared up. Your prospective client should get a qualified CPA and / or tax attorney to help clear up the mess. Try getting the other broker / advisor to accept or be forced to accept some accountability and make the person whole to some extent. The later is going to be tough but something might be done.
Once cleared up then and only then would I consider moving the accounts.
Good luck.
Jim2005-10-07 10:24, By: Jim, IP: [70.184.1.35]

L2: 72t I’m not sure of the SEPP Plan you are referring to. This is an IRA rollover from a qualified plan. What does SEPP stand for?
Al2005-10-07 12:20, By: al, IP: [24.249.155.51]

L2: 72t SEPP is Substantially Equal Periodic Payments or 72(t).
Jim2005-10-07 12:27, By: Jim, IP: [70.184.1.35]

L2: 72t Not to be confused with a “SEP”which stands for “SIMPLIFIED EMPLOYEE PENSION” which is a specific type of a retirement plan.2005-10-07 13:19, By: dlztaxes, IP: [4.175.9.61]