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Is this correct?

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Last Updated On
ByTracy

L1: Is this correct?Just wanted to see if this scenario was acceptable for all legal and practical purposes. Guy who is 57 and fully retired with a 401K rollover of $445,000. Split the 445K into three accounts (SEPP portion divided unequally in two accounts totaling 342K and anIRA excluded from the SEPP for 103K). Drawing 72t withdrawlsof $23,000 / year from one of the accounts in the SEPP ($105,000) depleting itin exactly 5 years. Does this work?2005-11-15 09:41, By: Dottin-i””s, IP: [66.212.116.34]
L2: Is this correct?Did the person retire at or after age 55? If so then the K-plan can be used for distributions free of the 10% penalty. However, it sounds like the IRA Rollover has already occurred and you are looking to split it up … correct?
If I understand correctly, your SEPP universe consists of $237K in IRA # 1 and $105K in IRA # 2, and your $23K distribution is based on the total of $342K. Correct? Having IRA # 3 for emergencies is a great idea.
Since you may draw funds from either or both IRA’s in the SEPP universe then I don’t see any “legal” problem with your plan, but I question the practicality of having all of those moving parts. Also, if something happens in the market and IRA # 2 doesn’t completely support the distributions for the full 5-years, then you will have to tap IRA # 1for the reamaining funds. This is not a real problem but be ready to file additional paperwork ( I forget the form number). If you suddenly have to take distributions from IRA # 1 before age 59 1/2 expect the 1099 R to be coded “Early Distribution – No Exception.”
Overall I think you are building a potential future problem that could be avoided by making both IRA’s equal and taking even distributions from each for the entire period, or simply use one large IRA for SEPP.
Just my thoughts.
Jim2005-11-15 10:37, By: Jim, IP: [70.184.1.35]

L2: Is this correct?To address your questions Jim (and thank you for your prompt reply), the gentleman retired two months ago at 57. Secondly, the portion of the SEPP we would assumably be drawing 72t payments from is a fixed interest 5 year SPIA that we have calculated to deplete in 5 years and one month. So instead of complicating all of his accounts with 72t withdrawls…we have set-up one withthe specific purpose of providing his 72t income. Make sense?2005-11-15 10:47, By: dottin-i””s, IP: [66.212.116.34]

L2: Is this correct?The SPIA option takes care of your distribution problem. Press on.
Jim2005-11-15 10:55, By: Jim, IP: [70.184.1.35]

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