Multiple IRAs – Excess Withdrawls
L1: Multiple IRAs – Excess WithdrawlsAt the time of starting my SEPPin 2007 I had two IRAs. One was relatively small and the other quite large. When I started the SEPP, I did so with the IRA that had the smaller balance because I thought the SEPPs would be enough for my needs. However, in 2008 and 2009, I needed additional funds (for reasons that don’t qualify for any other pentaly exception) and took large sums out of my IRA that had the bigger balance (the non-SEPP IRA).
While I realize the amounts I took out of my non-SEPP IRA will be subject to federal and California penalties, I have not found any guidance as to whether the distributions from my non-SEPP IRA will invalidate my SEPP arrangement and trigger retroactive penalties.
Any input would be appreciated.2011-06-02 20:44, By: 5citiescpa, IP: [18.104.22.168]
L2: Multiple IRAs – Excess WithdrawlsYour “Non-SEPP IRA” has no affect on the “SEPP IRA.”
You have done exactly what we advise … have one IRA for your SEPP Plan and a second IRA for your “emergency fund” so you DON’T bust the SEPP Plan.
Jim F2011-06-02 20:51, By: Jim F, IP: [22.214.171.124]
L2: Multiple IRAs – Excess WithdrawlsThere have been a variety of past PLRs that dealt with the your question – for a start check out PLR 9050030 & 89-46045. You can have multiple IRA accounts and they do not need to be combined for a SEPP, nor do distributions from one IRA that is non-SEPP cause the SEPP distributions to fail.
Bill Stecker has also dealt with this subject is his book available at
http://72t.net/72t/Sponsors/Stecker/PracticalGuideto72(t).2011-06-02 21:03, By: Gfw, IP: [126.96.36.199]
L3: Multiple IRAs – Excess WithdrawlsI just want to make sure that we are answering the correct set of facts.
We think that you used only the ONE of the IRAs as your “SEPP 72-T UNIVERSE”. If that is so, then the previous responses apply, especially because that is the only IRA that you took your distributions from.
You are also ok if you used a SECOND IRA as part of your SEPP 72-T UNIVERSE calcualtion, and the distributions were from either one or both of these accounts.
You have a problem, however, if the distributions were from an account that was not part of your SEPP 72-T plan UNIVERSE calculation initially.
Just want to make sure we respond to the correct set of facts.
2011-06-02 21:30, By: dlzallestaxes, IP: [188.8.131.52]
L4: Multiple IRAs – Excess WithdrawlsUmmm.
I had two IRAs. I only included one in the SEPP calculations and initial withdrawl in 2007. In 2008 I made the secone SEPP withdrawl from the same IRA. However, in 2008 and 2009 I withdrew amounts from my other IRA that was not included in the originalSEPP calculations.
Thank you for your quick response.2011-06-02 22:56, By: 5citiescpa, IP: [184.108.40.206]
L5: Multiple IRAs – Excess WithdrawlsThen I believe that you are ok. No problem.2011-06-02 22:58, By: dlzallestaxes, IP: [220.127.116.11]
L6: Multiple IRAs – Excess WithdrawlsIn myresponse to your original post I assumed that you had continued to take your required SEPP distributions from your designated (smaller) SEPP IRA Account for all years. Furthermore I assumed the large, Non-SEPP distributions came from your larger, Non-SEPP IRA Account. Now from your last post I’m not so sure that my first assumption was correct.
DID you continue your required SEPP Distributions for all years from your SEPP IRA Account in addition to the large, penalty withdrawals from your Non-SEPP IRA Account?
If you counted the two distributions from your Non-SEPP IRA as satisfying your required SEPP Distributions, then you have a problem. Please clarify.
Jim F2011-06-04 15:19, By: Jim F, IP: [18.104.22.168]
L5: Multiple IRAs – Excess Withdrawls5citiescpa…
I’ll agree with Jim. I’m also confused by your last post. Did you take all the required distributions for 2008 and later from the SEPP account in addition to the withdrawals made in 2008 & 2009 from the non-SEPP account?2011-06-04 15:26, By: Gfw, IP: [22.214.171.124]
L6: Multiple IRAs – Excess WithdrawlsI believe that it is semantics.
I think he is saying that he took his initial annual distribution in 2007, and his second annual distribution in 2008, both from the IRA account used for his initial calculation.
He then took a different second distribution in 2008 from a second, non-SEPP, IRA, whih was subject to the 10% penalty.2011-06-04 16:14, By: dlzallestaxes, IP: [126.96.36.199]
L6: Multiple IRAs – Excess WithdrawlsI know. I know. In my attempt to be clear I just confused things.
Yes, required withdrawls from SEPP account were made and will continue to be made as required.
My concern was over the other withdrawls taken from the non-SEPP accounts.
So the way I am reading your reponses and the way I read the rulings you cited, I think I am golden.2011-06-04 16:14, By: 5citiescpa, IP: [188.8.131.52]
L7: Multiple IRAs – Excess WithdrawlsBased on your last response I will refer back to my first response … you are “golden” as you characterize it.
Jim F2011-06-04 16:21, By: Jim F, IP: [184.108.40.206]