60 day rollover from account with guardianship
I have a potential client that is currently disabled. His mother has guardianship of his assets, and is on his checking account as guardian (not a joint account). They recently took a payout of his ESOP of around $600,000. The check will be sent ACH in the next few weeks to his checking account. We’re going to try and stop the payment and have it sent to an IRA instead. Should we be unsuccessful, is there any issue with the money going from his checking account to the IRA within 60 days? I’m just worried about the guardianship issue. Also, we were planning on filing form 5329 should he take a distribution this year (he’s only 40) instead of doing something like 72(t). Is this advisable?
Thanks!
Permalink Submitted by Alan - IRA critic on Mon, 2018-08-13 04:10
There are many issues here. What is being distributed from the ESOP, cash or employer shares? If cash, there will be mandatory 20% withholding which will have to be replaced with other money in order to have a complete rollover. If employer shares, the alternative of NUA might be considered if the distribution will be considered a qualified LSD. Even if the distribution is made in shares (witholding avoided), a 60 day rollover to an IRA can be done in lieu of NUA treatment. The guardianship should not be a problem unless there are special circumstances. As for Form 5329, if there is a taxable amount for which the client qualifies for the disability exception, it could be filed to waive the 10% penalty using the disability exception code.