Rollover a portion of a SEPP?

L1: Rollover a portion of a SEPP?I have a client that is age 51 and is receiving SEPP from his only IRA.His SEPP is currently calculated using the amortization method and his annual requireddistribution is $25,000. He would switch to theminimumdistribution method, howeverthis method (if I calculated correctly) results in a distribution that is too low.He is looking for a way to get more than the minimum under the new method, but less than he is currently taking. If he wants to set up another IRA, can he rollover a portion of his current IRA to establish a new IRA without being penalized or is he precluded from rolling over funds from this IRA since he has already started taking SEPP”s from this one? Ifthis does not work,is there another way to get this done? 2003-01-17 17:38, By: adr, IP: [127.0.0.1]
L2: Rollover a portion of a SEPP?
Unfortunately, your client is in a bind. While he can set up a new IRA if eligible to make new contributions, the existing IRA and it”s assets (whether in the current IRA a combination of otherIRAs) belong to the SEPP. There is no easy solution.
Take a look at one of our articles at http://72t.net/MN_ArticlesShow.aspx?WA=35, the problem is clearly stated. For many, it”s a choice between exhausting assets, or changing to a plan that provides too little income.
2003-01-17 17:45, By: Gfw, IP: [127.0.0.1]

L2: Rollover a portion of a SEPP?Hello adr:
Gfw is 100% correct & thus the “bind” for your client. There are however, two possible solutions:
1. Your client continues taking the higher annual distribution than desired for several years, building a sufficient after-tax nest-egg & then switches to the RMD method several years in the future. When this occurs, your client then takes a “too small” distribution from his IRA but supports his cash flow by starting to drain cash out of the after-tax nest egg built in the preceeding years. Not the best solution but one which will work to meet one”s cash flow needs.
2. There is a theory, and let me emphasize that it is only a theory, that a taxpayer can take an existing SEPP IRA, split it into two IRAs (this part is no problem) and then apportion the SEPP plan ratably between the two new IRAs (and this is the legal / tax hurdle). Then, elect the RMD method switch on only one of the IRAs continuing the amortization method on the other IRA. If this theory holds water, and I am not sure that it does, it would essentially provide unlimited flexibility in designing futrure period cash flows. The only way to prove this theory is to file for a private letter ruling.
TheBadger
wjstecker@wispertel.net

2003-01-19 09:42, By: TheBadger, IP: [127.0.0.1]