Acceptable IRA Value for SEPP Calculation?

You are here:
< Back

L1: Acceptable IRA Value for SEPP Calculation?We have a client looking to start a SEPP, the account was $930,000 at year-end and still $930,000 now; it reached $970,000 in early April. We want to start a second IRA and fund it with $200,000 of the $930,000; this will be our hedge in case the SEPP alone isnt enough, and will allow us to pull some money, with a penalty, that won’t blow up the larger SEPP. Can we run the SEPP calculation on a $770,000 amount ($970,000 April high minus the $200,000 June transfer out). Can we tap the second $200,000 IRA without it blowing up the $770,000 SEPP? Can we pull the entire SEPP within one check ASAP, no need to pull January through June with one distribution and then monthly through year-end right?2012-06-11 05:11, By: Clem0146, IP: []
L2: Acceptable IRA Value for SEPP Calculation?Rev. Rul. 2002-62 states that the value used must be “reasonable”.
What value is reasonable? Probably the amount in the SEPP portion of the IRA after the June spit occurs, not the value that was there prior to the split.2012-06-11 10:04, By: Gfw, IP: []

L2: Acceptable IRA Value for SEPP Calculation?Clem,
Along the lines of what GFW said, if you can print out a statementfor the IRA being used for the SEPP, that shows the exact balance you used to compute the SEPP calcs, and if no more money is added or taken out of that account after the figure was established for the SEPP calc, and if it is also within the last 6 months or so, you should have no problem proving it was a valid figure to use. It shd not include “calculations” as to how you arrived at the total.
KEN2012-06-11 21:09, By: Ken, IP: []

L3: Acceptable IRA Value for SEPP Calculation?As Ken indicated, the partitioning of the IRA account used for the SEPP makes the value on any prior date a moot point.
If you wanted to use 770k for the SEPP (970 less 200) and now the account has dropped to 930, then you need to partition out 160k to the emergency IRA account in order to provide you with the same SEPP calculation you originally planned. And with recent interest rates being lower, maybe you need even more than 770k for the SEPP account.
2012-06-12 03:16, By: Alan S, IP: []