Client's investment rep who he has worked with for 10 years approaches him early 2016 about a great deal. Talks him into rolling 100K from existing IRA to this new deal. Can't do direct rollover so has client withdraw 100k and invest in new deal as a rollover. A couple months go by and client is talking with other investors who tell him they can't get answers about investment and goes to find out rep's license has been suspended (a long with son-in-law who is out of Illinois and in the business) for selling products not licensed for. Taxpayer gets 1099R for 100K code 1 for penalty etc. No 5498 on file with IRS so we don't believe was ever transferred as IRA and not sure where the money is or if he will get any or part back. SEC is involved. My question is about the 10% penalty. Is there any way to avoid it. What are the chances of IRS abating due to the circumstances? I know it doesn't fall under any of the allowed exceptions. Might be able to use total disability or death once his wife becomes aware of the entire mess!