Not Sure How Big Of a Mess I”ve Created

L1: Not Sure How Big Of a Mess I”ve CreatedSeveral years ago I created a SEPP Plan in one of two totally distinct IRA’s in investment company A. In search of better returns and lower transactional costs I rolled over all the assets from the non SEPP tagged IRA and part of the assets in theSEPP tagged IRA into a single IRA at a new investment company B.
First question:Have I mistakingly violated any IRS rules up to this point? And, if so, any suggestions on how I can correct the mistake?
I now find myself needing to further tap my IRA. (And, unfortunately, it is totally unavoidable.) I see my choices as two. Withdraw funds from my Company B IRA with the 10% penalty, orinitiate an additional SEPP Plan in the Company B IRA to avoid the 10% penalty.
Second question: Can Icreate the second SEPPplan within the IRS rules?
I wish I would have discovered thisforum and websiteearlier. You provide a tremendous service.
2006-01-22 10:54, By: Jim, IP: [24.250.139.29]

L2: Not Sure How Big Of a Mess I””ve CreatedHello Jim:
Given the limited amount of information, my first impression is that you do have a great big expensive mess.
I would suggest that you seek professional help immediately as this problem will only grow.
TheBadger
wjstecker@wispertel.net
2006-01-22 10:57, By: TheBadger, IP: [66.250.23.25]

L2: Not Sure How Big Of a Mess I””ve CreatedSounds like you were initially OK, but the violation occurred not when you commingled your non SEPP account with the rollover of the SEPP account. What you left behind was still considered a SEPP IRA account as well. But as long as you bust it, unfortunately it does not matter how many accounts are involved. The ominous part of this is your reference to “several years”, as you probably know the 10% penalty is retroactive to the first distribution year of the plan.
Once you report the infraction and pay the 10% for those years, your original SEPP terminates and you can start a new one. You can make 2006 the start up year for the new plan even if you have taken distributions since 1/1, by making them part of your total new SEPP universe and annual distribution. If you start a new plan, you also start a new 5 year or age 59.5 term as if you never had a SEPP before. Of some comfort is thatsince your corrupted plan nowincludes all your accounts and you need to take more, you had nowhere to go to start up a new plan anywaybecause you leftno IRA accounts for emergency or new SEPP plan use. That is something youneed to consider when you structure a new plan for 2006 forward.
Note that there may be some other details that were not posted or you may have otherfollow up questions.2006-01-22 20:34, By: Alan S., IP: [24.116.165.157]