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L1: 72tI have a friend age 57 taking monthly distributions from an IRA under 72t. When the withdrawals started two years ago he was taking w/d based on an account balance of $1,000,000+ now his market value is less than $500,000 and rapidly depleting his account. He would like to reduce his monthly withdrawal if possible, so as to not deplete his account. Any suggestions?2002-09-04 10:28, By: JAH, IP: [127.0.0.1]
L2: 72tAt the current time there is no way to change the payment structure without “Busting the Plan”. While the IRS is considering the area, there has been no definitive answer as to the actual remedy that may be implemented.If I were your friend, I would probably hold tight and see what if anything the IRS implements.2002-09-04 12:07, By: Gfw, IP: [127.0.0.1]

L2: 72tUnfortunately, I must agree with Gfw. You friend can hope / pray for some favorable public rulings this Fall from the IRS or (s)he can jump in the private letter ruling pool.TheBadgerwjstecker@wispertel.net2002-09-04 14:10, By: TheBadger, IP: [127.0.0.1]

L2: 72tIf “he” has a real good marriage, I suggest a divorce of convenience; with a 50 50 division of his SEPP IRA. Then reduce his distributions by 1/2 and place enough assets in risk free investments to meet his distribution requirements. Being more aggressive, I might consider a 75 25 division with a 3/4 reduction in distributions. Good luck. 2002-09-05 12:29, By: PCK, IP: [127.0.0.1]

L2: 72tInteresting approach and I agree, I would have to be a REAL good marriage – and would hopefully stay a REAL good friendship – money is interesting, especially when someone puts 500,000 to 750,000 in your pocket with no strings :~}2002-09-05 13:56, By: Gfw, IP: [127.0.0.1]

L2: 72tI am clearly failing to see the bright light here. If our taxpayer (with the $500k IRA) gets divorced resulting in a 50/50 IRA split; he then is left with $250k and going forward also needs to distribute 1/2 of what he was distributing before. At least this is what all the PLRs I have been reading have said.As a result, it looks to me that he in the same place as before regards the distribution to the IRA value “ratio”.Now admittedly, the other spouse who received the $250k pursuant to a QDRO is under no obligation to perform SEPPs of any kind.TheBadgerwjstecker@wispertel.net 2002-09-05 16:35, By: TheBadger, IP: [127.0.0.1]

L2: 72tThere was a recent PLR (200225040) that allowed the husband to recalculate and restate the plan after a divorce.One point to keep in mind, even considering the ruling, is that the taxpayor was using the joint tables before the divorce and the IRS allowed switching to the single life table, an updated 5% rate and a payment based on the new balance.Too bad you have to get divorced first!2002-09-05 17:05, By: Gfw, IP: [127.0.0.1]

L2: 72tI too read this PLR & found it suspicious. I further suspect a portion that might be vital to understanding what was really happening in the PLR was redacted so we don’t get to see it. I therefore discounted this PLR as being an anomily of some kind. Conversely, all the other divorce PLRs (of which there are about 5 – 6) are all “prorata” reduction PLRs in the sense that the giving taxpayer was taking $XX,XXX per year from his IRA and the QDRO said give 50% to the other spouse; therefore it was okay to reduce the SEPP distribution amount by 50% as well; e.g. a step-in-stride ruling.TheBadgerwjstecker@wispertel.net2002-09-05 17:57, By: TheBadger, IP: [127.0.0.1]