This forum is provided for informational purposes and it not intended to be relied upon as a source of investment, tax or legal advice. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of the 72tNET.com owners, or the sponsors or firms affiliated with the author(s). Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Please read our Forum Rules.
BEFORE POSTING: Use this TEMPLATE when submitting a new post. Make sure you understand all terms used in the template and double check your answers before submitting your question. Carefully review the SEPP Planning Pointers and materials under the Tools and Resources menu (IRS Resources, Glossary, and Applicable Federal Rate table) before posting to make sure your question is clear and the answer you receive is accurate.
Subscribe to posts or edit your subscriptions by clicking on this link https://72tnet.com/community/subscriptions/ .
PLEASE NOTE: To avoid confusion, please do not add your question to someone else’s thread. If you have a question, please create your own post.
Rolled over to Vanguard, original amount less than what was invested
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?
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.
Perfect, thank you!