72t Partial Transfer
Is it possible to take an IRA with an existing 72t distribution and complete a partial transfer to a new IRA without busting the 72t? We would then take the same distribution amount pro-rata from the two IRAs.
Is it possible to take an IRA with an existing 72t distribution and complete a partial transfer to a new IRA without busting the 72t? We would then take the same distribution amount pro-rata from the two IRAs.
Permalink Submitted by Alan - IRA critic on Tue, 2016-02-16 19:40
Unfortuneately, there is no clear answer to this question. Although many thousands of these partial transfers of a SEPP IRA account have been done without challenge from the IRS, in PLR 2007 20023 the IRS busted a SEPP for a partial transfer. Attempts to secure a logical explanation from the IRS failed to produce a direct answer. Later, a similar but slightly different case resulted in another busted plan in PLR 2009-25044. So we know of two busted plans and thousands of other partial transfers that were unchallenged. If a taxpayer wants to accept those favorable odds and take their chance, it would be better to continue the SEPP distribution from the original IRA account so that there will be only one 1099R and attention will not be drawn to the new partial transfer IRA.