Client received two checks:

• ck #1 for $650,000 made payable to Pershing, FBO client representing 401k Direct rollover of pretax money to IRA.
• ck #2 for $3,500 made payable to client representing 401k after tax money.

We plan to deposit both checks into his ONE IRA with us, so $653,500 will be the total deposited into his new IRA. When client withdraws money, this is how we plan to handle the taxes on the withdrawal, which is really the issue here;

$3500/650,000=1%. So each time a withdrawal is made from the IRA, 1% OF THE WITHDRAWAL WILL NOT BE TAXED AND 99% OF IT WILL BE TAXED. Of course client and we will have to keep track of this for IRS purposes.

For example, if client withdrew $50,000 from his IRA, 1% of $50,000 is $500 which would not be taxable and $49,500 would be.

What do you think?

Grateful,

Steve