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Looking for some clarification here. Browsed the Internet and can't find the answer (even on the IRS Cares Act website)
I am currently in year three (2020) of a SEPP I set up after a Pension Lump Sum payment (under 59.5, started Jan 1, 2018). The IRA (IRA 1) that the SEPP is coming out of currently supports my Annual Distribution of apprx $90,000 per year. I am NOT looking to change ANYTHING on the SEPP for 2020 (and 2021 and 2022).
I have another separate IRA (IRA 2)that I "manage" and haven't taken anything out of in 2020 (59.5 this year). I am interested in taking a Cares Act Distribution from this separate IRA and paying the TAX rateably over three years. There is no clear guidance on how the current SEPP under "IRA 1" (taking $90K per year) would will affect taking a Cares Act Withdrawal out of "IRA 2". Is the $100K MAX over ALL accounts for the Cares Act INCLUDED with the SEPP Distrbutions or separate from the current SEPP?
Again, NO CHANGES on current SEPP, looking to take Distribution from separate IRA under Cares Act ("IRA 2). Confused on the $100,000 MAX all IRA's if making no changes to current SEPP.
Thanks!
I checked with a tax guru whose knowledge I highly respect. Her response is as follows:
I would assume that the “normal” rules would apply – IRS does not require IRAs to be aggregated for the SOSEPP exception -- that is, if you split the IRA into two IRAS and took the 72(f) from one, the other is completely separate (and another 72(t) could be started from that later) (See PLR 2001-16056 https://www.irs.gov/pub/irs-wd/0116056.pdf%20. Click or tap to follow the link." href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.irs.gov%2Fpub%2Firs-wd%2F0116056.pdf%2520&data=04%7C01%7C%7C8a6aac3c7aeb43faac6908d88a776082%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C637411592603245234%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=EryGyiMOA%2Bu%2F7W1aGTu0wceQUU4a88NcuQWF0tpG3fA%3D&reserved=0" target="_blank" rel="noopener noreferrer" data-auth="Verified"> https://www.irs.gov/pub/irs-wd/0116056.pdf for someone taking 4(!) SOSEPPs.)
Also note that certain disasters, including the current one, allow changes to SOSEPP (See page 16 bottom of Notice 2020-50 https://www.irs.gov/pub/irs-drop/n-20-50.pdf. Click or tap to follow the link." href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.irs.gov%2Fpub%2Firs-drop%2Fn-20-50.pdf&data=04%7C01%7C%7C8a6aac3c7aeb43faac6908d88a776082%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C637411592603255231%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C1000&sdata=ywJjO3Y%2F5tyVL7ArgT%2F9bpS0L3ZaJnDEn2n8LdQfTJ0%3D&reserved=0" target="_blank" rel="noopener noreferrer" data-auth="Verified"> https://www.irs.gov/pub/irs-drop/n-20-50.pdf which states that “In the case of an individual receiving substantially equal periodic payments from an eligible retirement plan, the receipt of a coronavirus-related distribution from that plan will not be treated as a change in substantially equal payments as described in § 72(t)(4) merely because of the coronavirus-related distribution” --the writer would be withdrawing from a separate account in any case but it might make a person more confident that it wouldn’t be a problem.
My only caveat, which she did not emphasize, is that you have to have been AFFECTED by COVID-19 to qualify for this provision. But, let me be clear, this does not mean that you were INFECTED by the coronavirus. For example, in many states the governors issued statewide directives that the state was under a COVID-19 mandate for non-essential people. In effect, this meant that everyone was "affected" by COVID-19 because of business shutdowns or reductions, layoffs, etc. That would be my only concern if I exercised due diligence it asking that question just to b sure if a client were asking my advice. I have a client in PA who did take out $ 100,000. Even though she was not infected with the virus, she was affected because she was laid off from one business she worked for, and had to cease operation of her personal trainer side business, because of the Governor's mandate.
I'm sorry that some of the links show up as garbage, that you can ignore. (I can't get back to the above response to delete them.) But the actual links do actually appear, if you look carefully.
