2.5 yrs into 72-T and Become Disabled
Client started a 72-t at age 55. Client is now 57.5 and has become disabled. Does the client still need to continue the 72-t for 2.5 more years?
Client started a 72-t at age 55. Client is now 57.5 and has become disabled. Does the client still need to continue the 72-t for 2.5 more years?
Permalink Submitted by Alan - IRA critic on Wed, 2024-09-25 10:31
No. The plan terminates, but the disability must be total not partial, and should be confirmed by an SSD award, or in the meantime by a statement from client’s MD that client meets the requirements of Sec 72(m)(7). This statement or proof of SSD award should be submitted to the IRA custodian, after which the IRA custodian codes the 1099R with Code 3 (disability), and client no longer needs to report the SEPP exception on Form 5329.