New SEPP

You are here:
< Back

L1: New SEPPI am setting up a new SEPP. I am 56 (Jan 58) years old and want to take the first distribution in November or December of 2014.
From what I have read I am limited to using an interest rate from the two months immediately preceding the distribution.
Would it be considered reasonable to use the month end account value from June 30, 2014 or must it be closer to the date of the first distribution?2014-11-13 11:53, By: pigtail, IP: [76.106.34.144]

L2: New SEPPI’m guessing that the account value on June 30 was higher than it is now. It would be reasonable is there isn’t a dramatic difference in the June 30 value to the value that exists when the plan is started.
Remember the word isreasonable. It would probably be unreasonable if the difference was caused by a withdrawal of funds by you.2014-11-13 12:05, By: gfw, IP: [205.178.51.82]

L3: New SEPPI gather by your response that there is enough ambiguity in using a previous valuation that it may not be wise to do so.
There is approximately a 13K difference in the account value due to trading losses.2014-11-13 12:53, By: pigtail, IP: [76.106.34.144]

L4: New SEPPThe IRS has not defined “reasonable” with respect to the account value used. My guess is that anything more than a 15% difference would not be reasonable, between 10 and 15 would be a gray area. Also, you cannot use any value prior to the date of your last distribution from the account or contribution to it, including rollovers. Otherwise, from a pure time standpoint 6/30 should be OK. Typically, you would go with the month end value that is highest in the last 6 months, and as long as you can clearly document it, you can use any day’s closing value. Most IRA custodians offer to retain the month end statements for a couple years or more, so if you lost your hard copy, you could just pull up the statement on line and print it. Might not be possible if you used a non month end daily valuation.
To max your calculation per dollar of IRA value, use single life expectancy, the highest value you can justify and document and the highest interest rate of the two month window. If you don’t need that much money, you could transfer the excess to another IRA account to use for emergencies, but if you do that you cannot use an IRA valuation prior to the date of the transfer.2014-11-13 15:48, By: Alan S, IP: [67.61.217.44]