transferring investment account
L1: transferring investment accountI have a client who has an investment account with her soon to be x-son in law and wants to transfer the account to me. We will be changing the investments but my question is can wedo this without jeopordizing a 10% penalty? If so is there something I need to be aware of to not make a mistake?2009-08-21 21:32, By: Dan, IP: [126.96.36.199]
L2: transferring investment accountI assume that the son-in-law isher broker. There is no 10% penalty for transferring her SEPP 72-T IRA in a “trustee-to-trustee transfer”. Be careful of “trailing interest and dividends”.
Since you are planning to change the investments, she should have the son-in-law sell the securities, especially if he charges her -0- or a reduced rate, or if she doesn’t mind him making whatever commission so he’ll have more money to pay alimony to her daughter. Unfortunately this would be at the expense to you of lost commissions from selling them, unless these are mutual funds with no commissions.2009-08-22 02:38, By: dlzallestaxes, IP: [188.8.131.52]
L3: transferring investment accountHow will I let the new custodian of the transferred IRA know how much the withdrawal is to be? If we just ask for the same $2,000/mth withdrawal and that amount reamains consistent from what it was before, the IRS will take that as enough to be in compliance with her original 72t selection. I have nothing to back up the 72t calculation except what the client is telling me and that scares me. You are right in the fact that the son in law is the broker on the account. So if I understand correctly, I would be able to perform an IRA transfer request and keep with the same withdrawal amount and find out when they received there first withdrawal from a bank account to determine when they started the 72t. One other item that I have not come across is the fact that she increase the amount she was getting after her husband passed away. The IRA came from his retirement plan. He was taking the minimum and she decided to take the maximum payout after his death. I thought you could only change by going to the life expectancy formula which would have reduced the amount? Would the age of the beneficiaries being here younger kids increase the amount of the available withdrawal?
Thank you for your expertise.2009-08-24 13:33, By: Dan, IP: [184.108.40.206]
L4: transferring investment accountI think you need to back off and reallly figure out what you are dealing with. The SEPP would have ended at the death of the IRA owner.
What was her age at the owner’s date of death?
What was the date of death?
Did she transfer the funds to her name and start a new SEPP?
What is the ownership titling of the IRA?
2009-08-24 13:59, By: Gfw, IP: [220.127.116.11]
L2: transferring investment accountWhat kind of investment account is it? If it is just a taxable brokerage account, there are no penalties for moving the account. There could be tax consequences of some sort, though, particularly if appreciated stocks are in that account.2009-08-23 21:36, By: Ed_B, IP: [18.104.22.168]
L3: transferring investment accountYou should start from step 1 to tell us everything about the account(s) and the history. As you may have gathered from the various responses, you may have a real mess here, and require professional assistance, especially since it appears that it may be an “inherited IRA” which completely replaced the deceased husband’s SEPP 72-T.
There is no such thing as a “SEPP 72-T ACCOUNT”. It is the taxpayer (and practitioner) who determine which account and amount was used to determine the annual distribution. When the taxpayer died, the SEPP 72-T ceased to exist, and the account was allowed to be continues/transferred in accordance with various options.
Give us more facts, and we might be able to give you more informed responses.2009-08-24 17:36, By: dlzallestaxes, IP: [22.214.171.124]
L4: transferring investment accountDan,
The key element here is how the IRA was re titled after husband’s death. If it was registered as a beneficiary IRA still showing his name AND survivor’s name as beneficiary, then all distributions she takes will be coded as death distributions, Code 4. That eliminates any need for a SEPP plan after his date of death. Code 4 means there is no early distribution penalty. However, if she rolled this over into her own name as owner, then she will have to determine if she needs to start her own SEPP plan or not. As gfw indicated, husband’s plan automatically ended at his death.2009-08-24 23:58, By: Alan S., IP: [126.96.36.199]