L1: Account ValuationIn the process of establishing a 72t for my wife. Would like to start in June. Plan to take a lump sum for thefirst 5 months of 2008, and start monthly distributions in June.
Her 72t will be through Morgan Stanley. MS does daily valuations on their IRA accounts. Can we use the dailyvaluation at close of business on May 15 to determine her account balance?
Great sight you have here. Used it to establish my 72t 4 years ago.
Regards,2008-05-14 06:15, By: RetiredBob, IP: [18.104.22.168]
L2: Account ValuationHello RetiredBob:
Short Answer: YES.
Longer Answer: The IRS tightened up alot of issues with Reve. Rule 2002-62. However, they also left open a big issue on determination of account balance by saying: “determined in a reasonable manner based on the facts & circumstances.” I think two issues should prevail in this arena: (1) apply common sense; (2) be able to conclusively prove up the account balance using some mechanism of external evidence; e.g. if you want to use an EOD balance from today then printout that EOD balance and save it.
[email protected] 14:05, By: TheBadger, IP: [22.214.171.124]
L2: Account ValuationBob,You did not specify this, but assume you plan on taking the lump sum in June as part of the 72t plan using the 5/15 account balance and opting for the full annual amount as her first year distribution.2008-05-14 17:41, By: Alan S., IP: [126.96.36.199]
L2: Account ValuationAlan S.
Correct….she will take full year distribution. However, we plan now to start her 72t in July to take advantageof higher interest rate. I assume using a May 15 account valuation is still OK?
Thanks2008-05-15 08:47, By: RetiredBob, IP: [188.8.131.52]
L2: Account ValuationYes, that is OK. The account balance date is not directly connected to the interest rate month, and there is more flexibility to use older dates, but I would avoid going back more than 6 months unless you are using the RMD method. You may have the opportunity for a higher balance than 5/15 by using a later date than that as well, the latest possible date being the date prior to ordering the first 72t distribution.
However, if the accountexperiences a nice increase prior to July and she wishes to partition the increase off to another IRA to use for an emergency source of funds later on, the account balance date will have to be adjusted to a date AFTER the latest transfer, distribution, or contribution.2008-05-15 10:47, By: Alan S., IP: [184.108.40.206]