Making a SEPP Distribution with Securities vs. Cash

L1: Making a SEPP Distribution with Securities vs. CashThis will be a new SEPP. DOB=2/3/1959. First payment will begin 4/1/16. I would like to make the SEPP payments with securities (at least partially) rather than with cash. In order to ensure that I make the precise amount of the required distribution, I would first transfer securities out of the IRA that I know will be valued less than the required SEPP distribution amount. Thenafter the securities have transferred and I am able tovalue them precisely, I would follow-up with a second distribution of cash that would be determined so that in conjunction with the previously transferred securities, the sum of the two distributionswould exactly equal the required SEPPdistribution.Do you see any problems with this?2016-02-15 18:18, By: RVF, IP: [67.224.77.86]
L2: Making a SEPP Distribution with Securities vs. CashAlthough you could do the math, you are still at the mercy of the valuation regimen of the IRA custodian for every like kind distribution you take. You can’t control the exact value the custodian places on each distribution done at different times of the day. You would literally have to complete all the in kind distributions by perhaps late November, then have the custodian’s tax Dept tell you what year to date value they have so far. Then you could take the balance in cash. Are you just trying to save on commissions by taking in kind distributions? Also, if you plan to set up automatic distributions, stay at least a week away from the first of the month or you invite problems with the Dec to Jan CY transition.2016-02-15 20:23, By: Alan S, IP: [160.3.87.235]

L3: Making a SEPP Distribution with Securities vs. CashThanks for your response Alan. The reason for taking in-kind distributions isfor tax reasons. And I am trying to makethis relatively easy bytakingannual distributionsfor 5 years.Every year, I will take two distributions. First, I will take the in-kind distribution early in the year. I will intentionally transfer shares of securities that I know will fall short of the required SEPP amount. As soon as that distribution is complete and Iknow the exact value of securities transferred, I will then takejust enoughcash as a 2nd distribution to get to the precise required SEPP amount.2016-02-15 21:58, By: RVF, IP: [67.224.77.86]

L4: Making a SEPP Distribution with Securities vs. CashYes, that makes sense but you may have missed my main point. How will you know exactly what the distribution value is without determining theprecise value to be reported on the 1099R prior to your cash distribution? IRS Regs do not specify valuation procedures or timesfor custodians to use,and other than mutual funds, the value of many other securities changes constantly in real time. The processing hour for distributions can also vary from day to day. Note that while you only need the aggregate 1099R value for determining your cash distribution, you need the value for each distributed security to establish the tax basis in your taxable account for that investment.2016-02-16 01:59, By: Alan S, IP: [160.3.87.235]