I am exploring the idea of doing a 72t on my client’s account.
Question.
Client has 2 separate IRA accounts.
One is in a VA with a GMIB rider, the other is in a managed account.
Would I need to combine the total amount of both accounts to get the calculation, or do I have to option or using only 1 account.
If I have to combine both accounts, what value do I use for the VA? the account total or the income base total?
Thanks
Client is 53, how long does he have to take the distributions. I know there is a 5 year rule but unsure of the specficis.
The plan must last for the longer of 5 years from the date of the first distribution or reaching age 59.5. In this case, client’s plan will terminate at age 59.5, although he does not have to take a distribution in the year he reaches 59.5 if he chooses not to. In the first year of his plan, he has the option of taking either a full annual distribution or a pro rated by the month distribution. For example, if his first distribution was in October, he could take 3/12 of his annual distribution if he wishes. For each year, the distribution pattern does not matter, as long as his total distribution exactly equals his calculated amount, and he can change the distribution pattern from year to year. If he elects to receive monthly or other periodic distributions, he should avoid setting it up with the distribution in the first 5 days or last 5 days of the month. The middle of the month is best, so there is time to correct any errors, particularly for the December distribution.
can he do a 72t with the balance from one account and a ROTH conversion with the balance from the other?
Yes, he can set up a 72t plan using only one account which limits the balance to only that account, and can convert the other account which is not part of the plan to a Roth IRA.
Permalink Submitted by Alan - IRA critic on Sat, 2020-10-03 23:06
You have the option to use only one account, but then you cannot use the balance in the other account in your calculation. You can also use both accounts to generate your calculation and your allowed distribution will obviously be higher, and you can also take your distributions from just one of the accounts, but you must understand that the other account is still part of your 72t plan and you cannot take any non 72t distributions from it or make any contributions or transfers to it. For the VA you would use the account value, and the value of both accounts you will use will have to be the values on the same date.
Permalink Submitted by Geoffrey Kasher on Sun, 2020-10-04 14:39
I appreciate your help. Stay safe