IRS Contacts

L1: IRS ContactsWhen dealing with the Service regarding 2002-62, has the principal author Michael Rubin been involved? I talked with him and he is firm that a person can not change to the RMD method during 2002 if withdrawals under one of the other methods have exceeded the RMD amount. He says that under such circumstances, the person must wait until 2003 to change to the RMD method. What are your thoughts on this?2002-11-06 22:28, By: dar, IP: [127.0.0.1]
L2: IRS ContactsLet”s go back to my previous response – if you aren”t comfortable making the change, don”t change. As I stated earlier, any comment that I make is based on my intrepretation of 2002-62, not necessarily the intent of the author.
Read Section 3 – If a series of payments commenced in a year prior to 2003 that satisfied 72(t)(2)(A)(iv), the method of calculating the payments in the series is permitted to be changed at any time to the required minimum distribution method described in section 2.01(a) of this guidance, including use of a different life expectancy table.
It clearly states that the change can be made at any time. However, you have also introduced something that would definately make a difference -“one of the other methods have exceeded the RMD amount”. If you have already taken payments for 2002, the change is indeed questionable. If you are trying to totally stop payments by switching methods because distributions to date have exceeded the MD amount, I don”t believe you can.I also believe that if the change is made per section 3, that new payments based on the new method start immediately, not next year.
Again, if you aren”t comfortable making the change, don”t! You are the one that has to live with it – an IRA is always between the owner and the IRS!2002-11-07 13:57, By: Gfw, IP: [127.0.0.1]

L2: IRS ContactsIf Rubin said this, it might help explain the language in the ruling which says that theRMD method would be used to determine the payment “for the year of the switch and all subsequent years…” We have questioned how this could be accomplished if the taxpayer had already received more than the RMD method would provide.
I think Gordon”s point is well taken. There is obviously a great deal of uncertainty surrounding the new ruling which will require further clarification. In some cases, the best we can do is make a reasonable attempt to comply with the rules as published.
2002-11-07 16:30, By: WLE, IP: [127.0.0.1]

L2: IRS ContactsI think there is some confusion here regarding what RR 2002-62 really says versus, what Mr. Rubin & others in the AGC’s office may have verbally indicated and what you think you heard. Needless-to-say, the RR governs & whatever you think you may have heard does not whenever there is a conflict.
.03(b) says in part “…begins distributions in a year [so far this could be any year] using… [old]…method may in any subsequent year switch to the RMD to determine the payment for the year of the switch and all subsequent years…”
This seems pretty clear — pick a year to switch, pick all the right values; e.g. acct balance, age, life expectancy and compute the payment & then take that payment in the “switch year”. The further implication is that it must be that amount & only that amount for the switch year based on the language “determine payment for the year”. Further, this pretty much forces (but not entirely) future year conversions to a year-end event as it would be much to easy to over-distribute under an old method early in the year. Thus, I think this is fairly clear as setting the general rule for conversions no matter when they might occur.
However, and this is a huge however, Section 3 goes on to say:
“If a series of payments commenced in a year prior to 2003 [this sounds like a special case / subset of .03(b) above] … the method of calculating payments… [can]… be changed at any time to the RMD method described in 2.01(a) [notice that this sentence takes you back to the method description only & does not contain a reference back to .03(b)]”
As a result, a special subset case has been laid out granting additional flexibility, but only to those taxpayers who commenced a SEPP program prior to 2003. These taxpayers get to switch, should they chose to do so — AT ANY TIME. How do we interpret “at any time”? That’s easy. The real question is how do we implement “at any time”. My read / interpretation is that you can pick any date and call it your conversion date using your old method through that date & then using the RMD method from that date forward for the remainder of the year.
Thus, I see the rules as clear — If you commenced SEPPs in 2003 or later, go to .03(b) to learn how to convert to the RMD; if you commenced SEPPs in 2002 or earlier, go to Section 3 to learn how to convert.
Lastly, as I am sure most would agree, did the IRS poorly draft this ruling? Of course. Did they intentionally make the ruling vague, particularly when it is so explicit in other areas? I doubt it; rather, I suspect they were in a hurry and they, believe it or not, are also humans.
TheBadger
wjstecker@wispertel.net

2002-11-08 08:41, By: TheBadger, IP: [127.0.0.1]

L2: IRS ContactsI simply want to change to the RMD method effective November 2002 as my SEPP was started Feb 2000. Rubin said I can”t change until Jan 2003 andtwo different phone calls to IRS customer service said I can”t although one suggested I call Rubin and he has called me back to find outwhat Rubin told me. Strange that IRS employees can”t talk to other IRS employees. Seems like a waste of tax payers dollars to suggest that such calls can answer your questions. All IRS contacts have been unable to answer the intent of 3.0. I truly believe that you are correct with your responses but as you say “an IRA is between the individual and the IRS so I suspect that least risk is to wait and make the change in Jan 2003. I would like to salvage the $11,000 per month for Nov and Dec but sounds like I should take the withdrawals and pay the Fed and State tax on the $22,000. Withdrawals under RMD will only be about $14,000 per year so Nov & Dec will be the equivlent of 18 months income.
Thanks for all of your help. If anyone withthe IRS was as knowledgeble as you are with 2002-62, life would be easier.2002-11-13 20:11, By: dar, IP: [127.0.0.1]