72T IRA rolled in with another IRA account
This year a client rolled over 2 IRA accounts in trustee-to-trustee rollovers into one combined account. It was learned after the fact, there was an active 72t in one of them! Since we are still in the calendar year, can they be separated (including calculated earnings) and still save the 72t or is it now busted with no hope of saving it?
Permalink Submitted by Alan - IRA critic on Fri, 2020-08-28 22:30
Technically, the plan was likely busted with the transfers and there is no IRS guidance on the proposed solution. Regardless, client might want to reverse the transfers with the earnings adjustment and none of these transfers will show up on a 1099R or in a distorted year end balance 5498, and therefore will only be known to the IRS if they audit the account transaction statements, which is highly unlikely unless a full audit is done for some unrelated reason. Client could then present their corrective action to the IRS if needed.
Permalink Submitted by Sheri Karpa on Fri, 2020-08-28 23:26
That was my thought as well. Thanks for the help!