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Switching from Amortization to RMD Question  


Nitrolord
Posts: 2
(@nitrolord)
Active Member
Joined: 2 months ago

I am currently in year 3 of my SEPP plan and have used the Amortization method, single life table to date. I would like to perform the permissible one time switch to the RMD method for the duration of my plan. Can I also switch from using the single life to the uniform life table when making the switch?

3 Replies
Tracy
Posts: 13
Admin
(@tracy)
Estimable Member
Joined: 11 months ago

Nitrolord, you can use any of the mortality 3 tables to calculate your distributions under the Minimum Distribution Method. Refer to Revenue Ruling 2002-62 ( https://www.irs.gov/pub/irs-irbs/irb02-42.pdf ). There are also several posts under Q&A if you want further confirmation.

Good luck!

Tracy

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1 Reply
Nitrolord
(@nitrolord)
Joined: 2 months ago

Active Member
Posts: 2

Thanks for the reply.  I had previously reviewed 2002-62 and it was this verbiage that gave me pause, "In the case of the required minimum distribution method, the same life expectancy table that is used for the first distribution year must be used in each following year. Thus, if the taxpayer uses the single life expectancy table for the required minimum distribution method in the first distribution year, the same table must be used in subsequent distribution years."

I could not find any specific clause permitting changing life expectancy tables when going from Amortization to RMD.  At this point in time, I want to minimize my withdrawal amount but not risk busting the plan.  Do you have any other source showing changing life expectancy tables is permitted when doing the one-time change?

 

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Tracy
Posts: 13
Admin
(@tracy)
Estimable Member
Joined: 11 months ago

I understand your concern. The wording you mentioned above is referring to the annual recalculation you will have to perform each year, not the initial RMD distribution calculation. For further confirmation you can: 1) read through all 72t-related IRS Resources ( https://72tnet.com/irs-resources/ ), 2) Review Private Letter Rulings and search through Legalbitstream ( https://72tnet.com/private-letter-rulings/ ) and 3) Search in the Q&As ( https://72tnet.com/knowledge-base/ ) for "one time change uniform" and read through the past posts. 

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