SEPP withdrawals

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L1: SEPP withdrawalsI have two money market rollover IRA accounts with Vanguard, totalling close to $500,000. I am retired, under 59 1/2 and my annual income is around $40,000. I am currently receiving a small monthly SEPP from one of the IRA accounts. The housing market depression has affected me in a big way, and I need extra cash to meet expenses. I am thinking of tapping into my other IRA account. Can I have two SEPP”s? If so, will the second SEPP be subjected to the 10% early withdrawal penalty?( used the LE method for the first one to avoid the penalty.) Would taking a one-time lump sum withdrawal from the second IRA be a better solution? I know I would have to pay tax, plus penalty, but I wouldn”t have the 5-year obligation of a SEPP.
What affect will it have on my overall tax debt if I tapped into that second account using either method? I would appreciate any advice on this subject. Thanks!2007-09-28 05:38, By: Denise, IP: [65.12.159.224]

L2: SEPP withdrawalsYou can have an unlimited number of SEPP 72-T plans. Each plan can have 1 or more IRA accounts devoted to the calculation of the annual distributions for each plan. The distributions for each plan can come from 1 or more of the IRA accounts related to that specific plan. “Busting” one plan will not affect the other plan(s). Your idea of taking an extra amount from a non-SEPP IRA account is correct — you owe taxes and the 10% penalty only on that distribution, and you are not locking that IRA accountup for5 years. Whatever distributions you take from an IRA or SEPP 72-T are added to your taxable income.2007-09-28 11:10, By: dlzallestaxes, IP: [151.197.5.135]

L2: SEPP withdrawalsThanks for your advice, which was very helpful. 2007-09-29 03:25, By: Denise, IP: [65.12.159.224]

L2: SEPP withdrawalsIf you will not need the full remaining balance for the second SEPP, partition that account before starting the second SEPP. That way you will have a third IRA to serve as an emergency fund for either of your two current SEPPs. Of course, if you do not have enough total IRA assets, this will not work.2007-09-29 11:34, By: Alan S., IP: [24.116.165.60]