IRA with 72(t) distribution
I have a client that has been taking out a 72(t) distribution for the last 4 years. I am considering moving one holding from this IRA to another IRA through a journal that will not generate any reporting. I am wondering if this will create a red flag on this existing IRA that the 72(t) is coming from or is it best to not disturb the account until the 72(t) has run its course?
Thank you.
Permalink Submitted by Alan - IRA critic on Fri, 2017-04-14 18:43
While the partial transfer is not likely to cause a problem, there were two cases where the IRS busted a plan for a partial transfer. Most notable was PLR 2007-20023. When asked for an explanation for their decision, the IRS released a response that made little sense. Since this has only happened in two cases out of hundreds of thousands, the odds are great that there will be no IRS contact. If you proceed, a non reportable transfer definitely provides less exposure than a rollover, and if the 72t distributions continue from the original account only then the 1099R forms would not change.
Permalink Submitted by [email protected] on Fri, 2017-04-14 18:54
Great. Thank you.