multiple IRA”s with same broker

L1: multiple IRA”s with same brokerThis month, I am planning to transfer part of my 401K to Vanguard and part to another brokerage firm. I presently have an IRA account with Vanguard that has a small remaining balance after taking non-sepp distributions this year. Vanguard has confirmed that I can open a second new IRA account to accomodate this 401k transfer, as I plan to start SEPP distributions probably before year end. Will having two IRA accounts with the same broker, one with code 1 distributions and the other with code 2 distributions for 2004 create a problem? Also I gather I would use the 401k rollover start balance to factorthe SEPP calculations?
Thanks,
Bob2004-12-02 23:04, By: cartows, IP: [141.152.222.198]

L2: multiple IRA””s with same brokerGood morning Bob:
Several years ago we had to set up IRA’s with different custodians to accomplish what you are describing because their computers were not able to handle the different scenarios. But today most custodians are equipped to handle it by using different accounts and issuing separate 1099-R’s for each account. I don’t have any firsthand knowledge of Vanguard’s situation but I suspect they are capable. Just remember that if you use multiple accounts at different custodians as elements of your SEPP plan, then all of these accounts are ‘frozen into the plan’ and you can’t make additional deposits or withdrawals to those accounts without a bust.
One problem you might encounter involves withdrawals. From the IRS standpoint as long as you take the same total amount each year, they don’t care which IRA’s you take from. However, if you have different custodians, or accounts with one custodian, and you start changing withdrawals, the custodian may give you a hassle and not code as you would like, causing a reporting nightmare. My suggestion is always to use the ‘KISS” principal and put your SEPP money into one IRA, turn it on an let it run while other money is in other IRA’s. If you need to start another SEPP plan, draw from the original, non-SEPP IRA’s.
Good luck.
Jim2004-12-03 09:58, By: Jim, IP: [68.1.157.228]