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Subject:  Re: 72t friendly brokerages Date:  6/14/2021  12:59 PM
Author:  aj485 Number:  103183 of 104348

How is that something that a broker can do? I mean, they may know that you're withdrawing from an IRA earlier than the penalty-free age, but how would they know that you're meeting the requirements of a 72t distribution? Isn't there an implication of a calculation done on all your IRAs, including ones that might be at another broker? IIRC, there were three ways of handling the calculations, so how would a brokerage know that you were doing it all correctly?

You are allowed to pick and choose the IRA accounts that you want to subject to 72(t) distribution, and if you tell the brokerage that you are doing 72(t) on this particular account, and which 72(t) method you are using, then they can calculate the correct distribution for you. If you are subjecting your entire IRA across multiple accounts to 72(t), and don't pull from the accounts proportionally, then you (or your CPA/tax advisor) would need to calculate the amount pulled based on the rules, and deal with filing the Form 5329.

But, if you are doing like the OP indicated, and subjecting only one IRA account (the OP's old rollover 401(k)/IRA account) to 72(t), then it is possible for the broker to make the calculations for the withdrawal required, and send you the correct amount weekly/monthly/annually - however often you choose to receive it. Not all brokerages will do that, though.

In the OP's case, it sounded to me like the CPA wanted the OP to change brokerages to a brokerage that would do the calculations so that the CPA wouldn't have to. Which is why I suggested that the OP needs to ask why the CPA isn't just doing the calculations and filing the Form 5329 themselves.

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