Rollover from IRA Account

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L1: Rollover from IRA AccountUnfortunately, afraid I know the answer to this, but haven’t laid my hands on official wording to confirm. Have a 57 year old client who started 72(t) last year. Took correct distribution of $26,000 in July; same to occur next four years.Just realized he later rolled out $150,000 from the designated SEPP IRA account into a separate IRA at different bankin September. Gotcheck; deposited intoother bank same day.Hasn’t touched the 150K, but appears he has violated the 72(t) rules. Thoughts? Solutions? Not sure I see any way out. Appears he’s looking at 10% penaltyon the $26,000. Thanks so much.2013-05-29 22:12, By: Viking8820, IP: []
L2: Rollover from IRA AccountThis is not a problem as long as he has not violated the one rollover limitation per 12 month period and the rollover is to a new account without a prior balance. He is allowed to roll over funds to the same type of retirement plan, but not to a different type. His new IRA account is now part of his SEPP plan. He can take out the 26,000 in any combination over the two accounts, but less IRS scrutiny will occur if he continues to take it from the original account. He will have to report the rollover on line 15 of his 1040 since he did not move the funds by direct transfer.
NOTE: The IRS HAS busted a couple plans for doing partial transfers, but have ignored thousands of other partial transfers. This makes his odds very good, but still not 100%. He should not lose sleep over this.2013-05-30 04:13, By: Alan S., IP: []

L3: Rollover from IRA AccountCLARIFICATION — I have seen many IRA direct transfers reported on 1099-R. I report all of them also on line 15 because IRS will be looking for it to be reported because their computers do not always read the codes that tell it that the transfer was a direct trustee-to-trustee transfer to another financial institution, or even to the same one. It is an easy entry on the tax return, and no sense giving IRS a reason to look at the tax return.2013-05-30 13:50, By: dlzallestaxes, IP: []