72t and IRA transfers to new custodians
Can you transfer a IRA account that is under the 72t distribution rule to another institution without busting the 72t?
Client began 72t in 2021. Took distribution from IRA. Then, client transferred the entire IRA to new Custodian. New custodian took 72t distribution in 2022. Now, she is looking to transfer the full amount of the IRA a new custodian. She will continue with 72t distributions in 2023 and so on…
Just want to make sure I’m not missing something regarding 72t distributions and transfers/custodians. As long as the entire IRA transfers and the correct 72t distribution is taken annually, is okay for the client to transfer the IRA again?
Permalink Submitted by Alan - IRA critic on Tue, 2022-02-01 20:05
Yes, it is OK. There have been a couple cases of the IRS busting a 72t plan for a partial transfer, but never for a transfer of the entire IRA balance. I might be somewhat concerned about the client making all these custodian changes since it might lead to making other changes that either not allowed or expose her to execution error.