I vote no, on the grounds that the 72(t) payments could have been calculated on only a portion of the original IRA balance. Normally, you'd split the IRA into an account to take substantially equal period payments from, and one that wasn't having distributions, but technically any given taxpayer only has one IRA (regardless of the number of accounts).

Would I have advised rolling over into a separate IRA-designated account? 100%. Will it be a hassle if they're using a 72(t) calculation that is based on the prior year balance, rather than a fixed dollar amount? Sure will! Do I think this blew the whole 72(t)? No.

That said, if I were the client (or if I were advising my client), I'd pay for a couple hours of research to document the statutory authority for the 72(t) requirements not having been blown.

So wrong. That's what I get for using logic, rather than actually looking it up. Thanks, @qbteachmt !