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Can an account balance dated before a (non-SEPP) withdrawal still be used to establish a SEPP?


NHP920
Posts: 15
Topic starter
(@nhp920)
Estimable Member
Joined: 11 months ago

Example with made-up numbers for clarity:

1/3/22: IRA account balance = $1,000,000.

1/23/22: Transfer $100,000 to a different IRA, leaving $900,000.

Is there anything preventing the 1/3/22 balance of $1,000,000 from being used for SEPP planning purposes even though there is only $900,000 of that left in the account? Is there specific language from the IRS addressing this?

 

2 Replies
NHP920
Posts: 15
Topic starter
(@nhp920)
Estimable Member
Joined: 11 months ago

I think I found my answer here https://www.law.cornell.edu/cfr/text/26/1.401(a)(9)-5:

(c) The account balance is decreased by distributions made in the valuation calendar year after the valuation date.

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dlzallestaxes@msn.com
Posts: 176
(@dlzallestaxesmsn-com)
Illustrious Member
Joined: 3 years ago

That makes sense. However, there is nothing stopping you from including BOTH IRA accounts in your SEPP 72-T UNIVERSE. So, in your example, you can still use $ 1,000,000 if you include BOTH IRA accounts in your calculation. You could take your ANNUAL DISTRIBUTION from either account in your SEPP 72-T UNIVERSE, such as taking it all from the larger account. Or, one of the accounts could have CDs, bonds, or preferreds that mature and generate cash for distributions without having to sell securities, mutual funds or ETFs (which were increasing in value, until recently).

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