How Can We Help?
< Back
You are here:
Print

Mirrored IRA

Posted
Last Updated On
BySue6803

L1: Mirrored IRAHello I am in the middle of a SEPP committment, with 2 more years to go. I would like to put part of my IRA money ( the one with the SEPP committment) into an actively managed bond asset management company. Schwab tells me that the money for the company to manage would stay at schwab but would go into a “mirrored” IRA that would have it’s own account number. So sounds like I would then have 2 IRA’s. So, how would this impact my sepp?…not adding to my IRA just splitting it into another one..sounds like.
2016-08-08 21:19, By: Sue6803, IP: [107.77.198.199]

L2: Mirrored IRAThe answer relates to the odds of having a problem. On at least two occasions the IRS has busted a SEPP plan for doing a partial transfer to another IRA account, which is exactly what Schwab would require here [Ref PLR 2007-20023, PLR 2009-25044]. While the IRS has never rationally explained these two rulings and they do not make any sense relative to the larger body of SEPP guidance, the risk must be recognized. That said, many thousands of partial transfers have been done by SEPP participants without any problem so your odds of avoiding a problem are very good.
Therefore, you need to weigh the advantage of going to this bond platform v. the risks of busting your plan in the two remaining years. Should you opt to go ahead, I would recommend that you continue to take your SEPP distributions from the original IRA account number and leave the new IRA account untouched. Your 1099R will remain the same as it has been, although your 5498 will show a sharply reduced year end balance for that account. A new 5498 for the new account is not conclusive because you might have funded the new account with a new rollover from an old 401k for all the IRS knows and that is not a problem.
Note that full transfer has not been a problem, but you probably would not be wise to transfer your entire IRA balance into the bondplatform account. So – with this information you will have to make your call.2016-08-09 03:04, By: Alan S, IP: [160.3.87.235]

Table of Contents