“Reasonable” Balance date and splitting IRA’s

L1: “Reasonable” Balance date and splitting IRA’sI had 1 IRA at 12/31/07 with a balance of $864,188. I want to start 72t distributions this month. I also want to split my IRA into two IRA’s 2/3rds 1/3rd for future planning flexibility. However, I am concerned about which balance i can use to do my calculation. My current balance is $745,258. I know i need to split the IRA’s prior to distributions but i’m not sure how i should determine my “reasonable” balance for the 2 IRA’s after split. Please advise.2008-10-03 11:02, By: meg, IP: [207.54.160.234]
L2: “Reasonable” Balance date and splitting IRA’sI have found my answer about “reasonable date” from colnol post on 9-19- but still looking for answers on my split IRA issue.2008-10-03 11:13, By: meg, IP: [207.54.160.234]

L2: “Reasonable” Balance date and splitting IRA’sI have found my answer about “reasonable date” from colnol post on 9-19- but still looking for answers on my split IRA issue.2008-10-03 11:13, By: meg, IP: [207.54.160.234]

L2: “Reasonable” Balance date and splitting IRA’sI have found my answer about “reasonable date” from colnol post on 9-19- but still looking for answers on my split IRA issue.2008-10-03 11:13, By: meg, IP: [207.54.160.234]

L2: “Reasonable” Balance date and splitting IRA’sThe key is your own needs. You could probably use 12/31/07 or any month-end (for convenience) during 2008. Usually we recommend using the lowest balance that will satisfy your cash flow needs, so that you will have a higher balance available to split again for a future 2nd SEPP 72-T, and still having some of that still left for any other emergency.2008-10-03 12:03, By: dlzallestaxes, IP: [96.245.168.66]

L2: “Reasonable” Balance date and splitting IRA’sAre you planning on using the entire balance for the SEPP or only one of the portions after the split?If you are only going to use part of the IRA(for example the 2/3 amount), then you should probably use the balance after the split is made and you have documents that show the amounts in two different IRA accounts.2008-10-03 12:12, By: gfw, IP: [98.214.144.242]

L2: “Reasonable” Balance date and splitting IRA’sYes, you do not say what you mean by “future planning flexibility.”If you intend to use the total of all account balances, you should probably not try to go back earlier than April for an October start date. However, if you are splitting the IRAs to create one with the balance you will need to fund your 72t distribution needs, you CANNOT go back prior to the date of the split.I would suggest you partition the IRA by direct transfer to preserve your 12 month rollover option for a safety valve in administering your 72t plan. In addition, I would have the IRA custodian flag the appropriate account that it is a 72t plan and is NOT to receive any further transfers from the other IRA, not unless you are using the balance of both IRAs for your starting balance.2008-10-03 20:12, By: alan+s., IP: [24.116.165.60]

L2: “Reasonable” Balance date and splitting IRA’sYes, you do not say what you mean by “future planning flexibility.”If you intend to use the total of all account balances, you should probably not try to go back earlier than April for an October start date. However, if you are splitting the IRAs to create one with the balance you will need to fund your 72t distribution needs, you CANNOT go back prior to the date of the split.I would suggest you partition the IRA by direct transfer to preserve your 12 month rollover option for a safety valve in administering your 72t plan. In addition, I would have the IRA custodian flag the appropriate account that it is a 72t plan and is NOT to receive any further transfers from the other IRA, not unless you are using the balance of both IRAs for your starting balance.2008-10-03 20:13, By: alan+s., IP: [24.116.165.60]

L3: “Reasonable” Balance date and splitting IRA’swhat i mean by “future planning flexibility” is that i am unemployed now but if i find work its my understanding i can change my method of calculation down to RMD and this will allow me to dial down my income. Right now, i need the most i can get so i plan on doing a direct transfer of 1/3rd of my current IRA balance and then do a 72t calculation on both IRA’s and start the distributions this month. Although based on your comments it looks like i should not use an earlier date for account balances. I assume that is on both IRA’s or just the new one?2008-10-06 12:56, By: meg, IP: [207.54.160.234]

L3: “Reasonable” Balance date and splitting IRA’sI think you should consider a different approach. The change to RMD will probably not make enough of a difference, and might push you into a higher tax bracket on top of your “next job”. Since that will probably come within the next year, you might be better off considering just taking IRA distributions as you need them now, and pay the 10% penalty. Once you get that next job, then set up a SEPP 72-T with part of your IRA, and keep part of your IRA for future emergencies.2008-10-06 14:21, By: dlzallestaxes, IP: [96.245.168.66]