SEPP Funding

L1: SEPP FundingIs it allowed to have more moneyin the SEPP account than is necessary for the annual distributions or must the SEPP-IRA have the exact amount? Per the calculators I need $165,533 to fund my planned distributionbut Ihave$190.000. I have other IRAs for emergencies. Thanks.2009-11-19 16:35, By: Ron A, IP: [97.120.34.250]
L2: SEPP FundingNo. If you will be using less than the total, move the excess to a new IRA before starting the SEPP plan.2009-11-19 20:36, By: Gfw, IP: [216.80.125.206]

L3: SEPP FundingRon, You are actually allowed to use a lower interest rate and/or joint calculations such that your SEPP calculation produces a similar number using your full account balance of 190,000. You cannot exceed the max rate, but you can use a lower rate.Note that itis far better to partition your account as Gfw suggested, but since you state that you do have plenty of other assets for emergency needs, this is not as critical in your case as it wouldbe for others.You mayjust prefer to work the calculations to get what you want from the current initial balance of the IRA.This approach should only be considered by those who have plenty of other IRA or non retirement assets to use for emergency funding needs, and are sure that they would never need the extra dollars from the current IRA that they are leaving on the table by using a lower interest rate.2009-11-20 00:00, By: Alan S., IP: [24.116.165.60]

L2: SEPP FundingAs Alan stated, you could use a lower interest rate, but why reduce your options. By using the maximum rate and segregating the excess assets…

You get the desired income.
You have more control if you do need additional funds – once locked in the SEPP, they should be considered lost until the end of the plan.
If you need additional income next year, you can always use the excess to start another SEPP.

Planning really involves maximizing your options. Dividing the IRA, rather than using a lower interest rate,maximizes your options.2009-11-20 00:35, By: Gfw, IP: [216.80.125.206]