Additional Rollover

L1: Additional RolloverI have a client who began a 72t from an IRA this year. Since beginning the 72t he has rolled over additional funds from a retirement plan into the same IRA account. How do we calculate the distribution amount on the additional funds? As these were pension assets, we do not have a value for them as of 12/31/05. Do I recalculate the entire balance based on the original amount in the IRA as of 12/31/05 and add the rollover contributions to these amounts at the value as of the date of the rollover? 2006-09-19 09:43, By: Shaun, IP: [216.163.254.4]
L2: Additional RolloverShaun,Unfortunately, I have no answer, only a follow-on question: Had the rollover been directed to a discretely separate IRA account, would this issue be moot? I have several rollover opportunities and don”t look forward to complicating any 72t I might implement.Regards – Cisco2006-09-19 12:53, By: Cisco, IP: [24.233.49.214]

L2: Additional RolloverUnless the additional fundswere part of the initial SEPP calculatuions, he effectively busted the SEPP when the non-SEPP fund were added. If the amount taken in 2006 isn”t substantial, he may want to pay the penalty and restart the SEPP.

Rev.Rul. 2002-62, Section 2.02 (e) Changes to account balance. Under all three methods, substantially equal periodic payments are calculated with respect to an account balance as of the first valuation date selected in paragraph (d) above. Thus, a modification to the series of payments will occur if, after such date, there is (i) any addition to the account balance other than gains or losses, (ii) any nontaxable transfer of a portion of the account balance to another retirement plan, or (iii) a rollover by the taxpayer of the amount received resulting in such amount not being taxable.
Had the funds been transferred to another IRA there would have been no problem with the SEPP.
2006-09-19 15:51, By: Gfw, IP: [172.16.1.70]

L2: Additional RolloverGFW – thank you for the response, however, since the SEPP was started in 2006 don”t we still have time to adjust the amount that is taken out of the SEPP by re-doing the calculation based on the new funds?? We do have the entire year to take the withdrawals, correct?
Also, if the above is incorrect, could we not do rollover of the funds which went into this IRA into another one within the year and begin a 2nd 72t from there?2006-09-19 16:04, By: Shaun, IP: [216.163.254.4]

L2: Additional RolloverRe-read paragrph (e) that I posted in my reply – the transfer into the SEPPoccured after the first valuation date.
Can you rollover the non-SEPP funds to another IRA and be Ok. Don”t know, there is always hope that you would be dealing with the new friendlier IRS.
You could also file for a PLR – minimum cost about $9k.
Or, you could do the rollover, hope that all goes away and that everyone lives happily ever after. A lot will depend on the year-endreporting done by the IRA Trustee/Custodian to the IRS.
Bill might have a few additionalthoughts or comments.
>>We do have the entire year to take the withdrawals, correct?Yes, but this really has nothing to do withquestion of funds being added to the SEPP.
2006-09-19 16:29, By: Gfw, IP: [172.16.1.70]