72T Accounts
I know you can transfer an IRA that is being used for the 72T program from one custodian to another, but can I break the one IRA I have in half and have two account numbers with the same custodian and use both to do my calculation at the end of the year.
Permalink Submitted by Alan - IRA critic on Mon, 2021-09-27 15:54
Maybe, but the IRS has issued 2 PLRs in the past that busted 72t plans for partial transfers (PLR 2007 20023 and 2009 25044). While 2 out of thousands is pretty good odds, the risk that the plan could be busted may not be worth taking. Most taxpayers move funds because they were sold on an IRA annuity by a commissioned agent who is not aware of this risk.
If you think this is important enough to take on this risk, be sure to use a non reportable transfer to partition the current IRA, then continue to take the 72t distribution entirely from the first IRA account. The IRS will then only see a 1099R every year with the same distribution as before. In other words, do not call attention to the partial transfer. That further reduces the risk, but does not eliminate it. The second IRA is still part of the 72t plan, and like the first account is not allowed to distribute a non 72t distribution or receive a contribution until the plan has ended.