Can I use total balances of all Trad. IRA accts to calc SEPP from one?

L1: Can I use total balances of all Trad. IRA accts to calc SEPP from one?
IRA owner DOB: Aug 18 1960; Spouse DOB: 02/13/1959
I (the IRA owner) retired August 1 2017 at age 57. I wantto set up a new SEPP with first distribution May 1 2018, with monthly distributions.
I have four separate traditional IRA accounts with TOTAL current balance of ~$980,000.
I want to take a SEPP distribution from one of these IRAs; the balance in this one account can accommodate 5 years of SEPP distributions without being depleted.
Questions: (1) Can I calculate the SEPP distribution based on the TOTAL balances, and then take that full amount from only one IRA?
(2) Can I use the total balances in the IRA accounts as of year-end 2017 for purposes of calculation, or must the balances be current balances as of the date of first distribution (May 1, 2018)?
2018-03-27 18:13, By: Aratinga, IP: [216.172.224.92]

L2: Can I use total balances of all Trad. IRA accts to calc SEPP from one?
1. I assume that you do not have a 401-K or 403-B.
2. I assume that you do not have a company retirement account with company stock.
3. I assume that you have no other way to get to 59 1/2 in 24 months from now (like a home equity loan or line of credit), so you won’t be locked in for 5 years until you are 62.
4. I suggest that you use the reverse calculator on this website to determine the minimum that you have to set aside in a SEPP 72-T to provide whatever amount that you NEED annually over the next 5 years.
5. Look at your 2018 Projected Tax picture to determine how much taxable income you want to have in 2018 (considering the new tax law), especially because you have options as to whether you take the ANNUAL SEPP distribution prorated for 2018, or 100% for 2018.
2018-03-27 19:37, By: dlzallestaxes, IP: [173.75.252.16]

L3: Can I use total balances of all Trad. IRA accts to calc SEPP from one?
If you cannot avoid a SEPP based on the questions from dlz, the answer to your two questions is Yes.
You can include all account in your SEPP universe for calculation purposes, but then you will have to continue to treat them as such by not making any contributions including rollovers or taking any non SEPP distributions from any of them.
As for the account balance, you can use the 12/31 balance of all the accounts provided that you have not taken any distributions from any of them between 12/31 and the date of your first SEPP distribution. And given the current unstable stock market, if the actual account balances come May 1 are substantially different from the 12/31 balance you will have to use a date where the balance is not substantially different. The IRS has not defined how much of a difference is considered substantial for these purposes, but I certainly would not use the 12/31 balance if your actual balance on the date of your first distribution is over 15% lower than it was on 12/31.
2018-03-27 20:32, By: Alan S, IP: [24.117.172.15]

L4: Can I use total balances of all Trad. IRA accts to calc SEPP from one?
Reply toAlan S:
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Thank you! This is what I needed to know.
2018-03-27 20:59, By: Aratinga, IP: [216.172.224.92]

L3: Can I use total balances of all Trad. IRA accts to calc SEPP from one?
Reply todlzallestaxes:
1. I assume that you do not have a 401-K or 403-B.Correct.
2. I assume that you do not have a company retirement account with company stock.Also correct.
3. I assume that you have no other way to get to 59 1/2 in 24 months from now (like a home equity loan or line of credit), so you won’t be locked in for 5 years until you are 62.
Actually I hadn’t considered a HELOC as an option here; house is not paid off but I do have ~ $200K in equity, so that may be a possibility.
4. I suggest that you use the reverse calculator on this website to determine the minimum that you have to set aside in a SEPP 72-T to provide whatever amount that you NEED annually over the next 5 years.
It looks like I will need essentially what the total IRA balances would provide. Wife is still employed and will continue to work for 5 more years, but she’s a teacher who is plateau’d at the top of the salary schedule and won’t see anything more than maybe a 2-4% increase in income over that 5 years.
5. Look at your 2018 Projected Tax picture to determine how much taxable income you want to have in 2018 (considering the new tax law), especially because you have options as to whether you take the ANNUAL SEPP distribution prorated for 2018, or 100% for 2018. I have an appointment with tax preparer next week to do that. With new tax law it will be interesting. I’ve run the annual SEPP calcs on both pro-rated and not and will check it out.
Thank you for your very helpful response!
2018-03-27 20:55, By: aratinga, IP: [216.172.224.92]

L4: Can I use total balances of all Trad. IRA accts to calc SEPP from one?
If your wife is not taking the maximum 403-B deduction of $ 24,500 then you could do that to reduce taxes.
Or you could discontinue your wife’s 403-B deduction completely, and reduce your SEPP 72-T distribution needs accordingly.
Or use non-taxable HELOC distributions to replace your wife’s 403-B deduction to help your cash flow.
2018-03-27 21:25, By: dlzallestaxes, IP: [173.75.252.16]