Recalculation Start Date

L1: Recalculation Start DateClient has taken four months worth of her SEPP for 2006 and has decided she wants to do the one-time calculation. My understanding that these are done at the beginning of the calendar year so as to use prior year account balance for the calculation. Can this client now “pretend” she”s been on the recalcuation method for her payments during 2006, using 2005 ending balance, and then we would adjust her future 2006 payments so that at the end of 2006 the total amount taken would total what the recalculation amount equalled? IRS wouldn”t know we didn”t really recalculate at beginning of 2006 — 1099R shows only the annual amount withdrawn. Thanks.2006-04-13 16:53, By: kt, IP: [66.166.8.83]
L2: Recalculation Start DateYes,client can do that retroactive to Jan 06. But recognize that this will back her into a corner since she cannot increase her payment unless she has other IRA accounts to start a second SEPP later. Of course, with great investment experience her RMD would increase, but with poor experience it could drop even further. 2006-04-13 20:21, By: Alan S., IP: [24.116.165.157]

L2: Recalculation Start DateThank you. I guess I mostly want you to please confirm that annual recalculations are all done at the beginning of the calendar year for all clients using that method, using the prior year balances for the re-calculation. Should onedecide they want to,retro-actively,go with the recalculation for the current year, they could do so only if they haven”talready taken out more than what the recalculation amountfor current year amounted to.
kt2006-04-16 13:11, By: KT, IP: [66.166.8.83]

L2: Recalculation Start DateFor clarification, it”s best to refer to what client intends as the “one time switch to the RMD method” rather than recalculation, which infersadjustments in the original method that are applied each year.
This one time switch will lock the client into using each 12/31 FMV figure for the IRA(s) in the SEPP to determine the following year”s SEPP distribution, starting with the 12/31/05 FMV. Flexibility exists early on to make changes to an intended plan in the first calendar year, as long as the amount distributed matches an approved calculation amount. All this is moot in this case because you are specifically allowed the one time switch anyway in the case where the RMD method replaces one of the other methods.
2006-04-16 23:22, By: Alan S., IP: [24.116.165.157]