Account Split

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L1: Account SplitOkay, here we go…
I have a gentleman that has about 300k in brokerage account in which he is receiving 72t distributions another advisor started.
We are looking to liquidate all monies from the brokerage over to a new IRA account. The problem is that there is a fund that is not so liquid (with about 30k in it).
So, If we move 270k into one account (keeping the same 72t monthly income the same) and the other 30k ACAT transfer to a second account, would there be any problems with that as far as 72t is concerned.
When the advisor started the 72t calc. originally, he used the 300k that was in the brokerage IRA, 60k that was in an EIA IRA and 30k that was in a non-qualified EIA to come up with the number.
Yes, he used a qualified and non-qualified account to come up with the one full number.
Any help on this transfer would be much appreciated.
2005-11-17 11:40, By: Emeral, IP: []

L2: Account SplitHello Emeral:
I’ll let one of the tax experts comment about mixing IRA and Non-qual EIA funds into a 72(T). I suspect there may be a problem since 72(q) covers the Non-qual aspect, but let’s see what they say.
Generally you can move assets around to different custodians and split it up as you see fit, as long as the SEPP universe stays intact and no additions or subtractions are made, except for normal 72(t) distributions. But I question the wisdom of breaking up the IRA in the brokerage account.
If you ACAT the whole IRA to your B/D and then make the changes within the new brokerage account, it seems like you would have a more maneageable situation since you can put just about anything into the one of these types of accounts. I have seen VA’s owned by the IRA / brokerage account.
Just some thoughts.
Jim2005-11-17 12:13, By: Jim, IP: []

L2: Account SplitI think the big problem (forget about moving the funds until it is resolved) is that you can’t combine qualified and non-qualifed funds.
There could have been a SEPP established for each (qualified and non-qualified), but they would havehad to have been stand alone SEPPs with the appropriate amount removed from each plan independantly of the other. 2005-11-17 12:39, By: Gfw, IP: []

L2: Account SplitSounds like thisPlan was “busted” before the first distribution was made simply by combining IRA and Non-qual assets in the same SEPP universe.
Ithink that you should stop all efforts to move any of these accounts until the prospective client and his / her attorney resolve any claims they may have against the original broker & B/D. If you try to move the accounts at this point you get all of the headaches and legal problems. You can’t win in this situation.
Jim2005-11-17 12:50, By: Jim, IP: []

L2: Account SplitThanks for the input!
2005-11-17 12:59, By: emeral, IP: []

L2: Account Splitemeral-agree that should stop 72t now as it has been violated from start. Pay 10% penalty on what has been withdrawn to date and start another 72t using the current value of the 2 IRA and excluding the non-qualified annuity. As for a claim against the firm, it’s not going to be worth the headache or the expense of doing it unless the amount of the back taxes due to the 10% penalty is pretty high. good luck-act now2005-11-18 10:48, By: john , IP: []

L2: Account SplitI disagree with John. I think you should retain an attorney to send a letter to the broker and brokerage firm indicating the professional negligence in performing an illegal act. Threaten to report them to the SEC, state SEC, and the licensing boards and state attorney general if they do not compensate the client for the 10% penalty, interest, and legal fees. And I’m sure that the newspapers would love to print a story about these illegal activities and incompetent brokers and firms. Don’t let them hurt others in the future as well.2005-11-18 22:54, By: dlztaxes, IP: []