Combining IRA accounts for a larger 72(t)
Client needs money and has limited resources.
56 year old client. Two IRA’s. One with a balance of$110,890.48 Second one with a balance of $24,492.77.
Can I total the IRA’s, use the total of $135,383.25 and get my hypothetical projection by Annuity Method of $403.75 and take it all out of the account with the $24,492.77?
Wouldn’t that prevent the client from touching both IRA in the next five years?
Even if I did the calculation for the client correctly, is it best to have the accountant actually do the calculation and have the accountant tell the client what amount to take out? I could present it to my client as a suggestion to review with her accountant.
Permalink Submitted by John Peterson on Wed, 2013-12-11 20:49
No, unlike IRA aggregation for RMD purposes any 72(t) arrangements must be established and taken separately from whichever IRAs client wants to withdraw from. And 72(t) calculation methodology can be different for each IRA.
Permalink Submitted by Alan - IRA critic on Wed, 2013-12-11 23:35
Actually. the client CAN aggregate the two IRA accounts as desired to calculate the 72t distribution and take the distribution from just one of the IRAs, or for that matter in any combination. Both accounts are considered part of the plan so there are no accounts left to take emergency distributions from. Client could also set up separate plans as well from each IRA, but that could cause confusion and is usually done some years apart after the first plan falls short of cash needs. Also, the amortization method will generate a slightly higher distribution than annuitization method.