Moving an IRA to another advisor w/ 72t already in place
Good Morning
I want to start off by saying how amazing this forum is! I have learned so much about 72t.
I have an IRA that is managed by an Independent Advisor. I’m 54 years old and want to start SEPP distributions ASAP.
My plan is to split the account in two. I’ll receive the annual payment from a smaller original balance.
Question 1: If I decide change advisors and move accounts (completely out of the organization) will that disrupt the Rules of 72t?
Question 2: (off topic) What is a reasonable AUM % fee for a $3.5 mil IRA. No strategic retirement planning or tax preparation has been offered.
Assett Allocation is 45% stocks, 37%mutual funds and 18% ETF’s.
(I may start another topic for this 😁)
Thank you in advance for any input!
Permalink Submitted by Alan - IRA critic on Wed, 2025-02-19 10:45
Q 1 – A direct transfer of the 72t IRA will not bust the plan, but it could result in confusion in coordinating distributions to match the required amount in the year of transfer. And the new advisor must be fully aware of the plan, be provided with a copy of the 72t calculation and with the date of the first distribution. There will be two 1099R forms for the year of transfer if distributions are taken from two different custodians. They must add up to exactly what the annual calculation produced. Therefore, such a transfer adds some risk that an execution error could be made. Finally, the holdings should remain liquid enough to enable the annual distribution. If feasible, you might change advisors before 72t distributions start as that would eliminate the need to coordinate in the year of advisor change.
Q2 – The standard rate is 1%, but for an amount of 3.5mm it should be lower, probably .75% or less.