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Rolled over to Vanguard, original amount less than what was invested

3 Posts
2 Users
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Posts: 14
Topic starter
(@larryh)
Active Member
Joined: 2 years ago

When calculating the distribution, does it have to be based on the balance on the exact day the distribution is made? For instance, I put in $564,000, the worth of the fund is now $547,000, and of course that may change as well. Which amount do I use?

2 Replies
Posts: 193
(@dlzallestaxesmsn-com)
Estimable Member
Joined: 5 years ago

The distribution is based upon the value as of the date that you chose which is supposed to be "a reasonable valuation". This has been interpreted by most tax practitioners to be any month-end (or even date within a month) within the past 6 months (i.e. 12/31 valuation can be used up thru a 6/30 distribution). I am not aware of the IRS ever challenging this approach, even during the past few years when there have been significant gyrations of the stock market. The date and related valuation have to be carefully selected. If you take the highest value, and only need a portion of your total IRA balances, then that will allow you to place some of your IRA balances in a separate account for use for future additional SEPP 72-T plans to be set up, or one-time distribution(s) in the case of any emergency that would be subject to the 10% early distribution penalty, but only on that distribution, rather than having to bust your plan before the later of 59 1/2 or 5 years, which would penalizes you with that 10% penalty on ALL of your distributions from the beginning, which can be disasterous.

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Posts: 14
Topic starter
(@larryh)
Active Member
Joined: 2 years ago

Perfect, thank you!

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