L1: Brokerage Firm
i contacted my current IRA brokerage firm (large well known company) to ask about 72t plan support. They said they they are required to designate ALL IRA withdrawals before 59 1/2 as an early withdrawal (subject to penalty) and report it to IRS as such, because they could not be certain it was a proper 72t plan withdrawal. I would then be required to file an exception request form with IRS as part of my year end tax filing.
Are you aware of any brokerages that are supportive of 72t plans?
2017-12-28 12:33, By: QA, IP: [188.8.131.52]
L2: Brokerage Firm
In my opinion…
Stay with your current firm if you are happy in all other respects Manage your own plan File an IRS Form 5329 to claim the exemption
Remember, an IRA (and SEPP Plans) are between the IRS and the IRA owner regarless of what services a brokerage firm offers (or doesn’t offer)
2017-12-28 12:39, By: Gfw, IP: [184.108.40.206]
L3: Brokerage Firm
The 5329 form is very easy to prepare, and should be a standard form available on all personal tax preparation software, as well as all professional ones, including H&R block and similar companies.
Almost all financial firms will use the code that it was an early distribution with “no known exception”. While they may know that the IRA you have with them is a SEPP 72-T plan either because you told them, or even gave them the documentation, they have no way of knowing if your factors are all correct, or if you have other accounts in your SEPP Universe that you didn’t tell them about. If they don’t have a copy of your birth certificate, they cannot be sure that even that basic information is correct.
For all of those reasons, they will not take responsibility for telling the IRS that the figures are 100% accurate.
2017-12-28 15:55, By: dlzallestaxes, IP: [220.127.116.11]
L2: Brokerage Firm
Ameritrade will report it on your 1099. you just have to remember when taking the distribution to check off the option for Early Distribution part of a series of substantially equal periodic payments.
But like mentioned above, if you are happy with your current brokerage house may be what you should base your decision off.
2018-01-03 02:34, By: brkr12002, IP: [18.104.22.168]