Full Transfer of IRA with 72T to Multiple IRA’s
A client’s previous advisor placed his entire rollover into one IRA with 72t payments. It seems she only calculated 72t payments on a portion of the account because the account balance is over $800,000, and the obligation on the 72t is only $108,806. He’d like to complete a full transfer, but I have only found information pertaining to a full transfer to 1 account. He really wants a fixed annuity for a portion of the funds (whether or not that is possible or advisable isn’t important for this discussion). Is he allowed to complete TTTT’s and place into multiple new IRA’s, keeping the $108,806 as one IRA and maintaining distributions from only that one account? Thanks for your help.
Permalink Submitted by Alan - IRA critic on Mon, 2014-12-29 21:22
It sounds like 72t distributions have already been taken from an IRA that on the date of the account valuation, the value far exceeded what the plan calculation was based on. If so, this plan was busted if not immediately, certainly at year end when the total distributions starting with the first plan distribution fell far short of a correct calculation. There is no way to fix this other than by reporting a busted plan and paying the penalty for distributions to date, then starting a new 72t plan that is properly established, Transfers can and should be made to establish an IRA with the balance needed to support the distribution needed, and the rest of the balance should be in IRA accounts that are not part of the plan and could be used for emergency needs. Again, there is no way to salvage the initial plan by doing transfers out of that IRA. At least it sounds like only a small total amount of distributions have been taken.