setting beginning amount for SEPP
L1: setting beginning amount for SEPPI’m planning on beginning a SEPP in the next couple of months out of one IRA I have that is currently worth ~300k. I’ve read that you can fix the IRA’s beginning amount at any time prior to the month you begin the first SEPP distribution. This IRA is all one mutual fund that has fluctuated ~30k over the last month or 2 up and down. Can I pick a date more or less at random when the fund is up the 30K to use as the fixed start amount even though it might decline the 30k prior to the month I start the distribution? It doesn’t have to be the 15th or 30th of the month but any day prior to the month I start the distribution? Thanks for the great site.
2009-06-22 18:51, By: mikek, IP: [18.104.22.168]
L2: setting beginning amount for SEPPCorrect. Just make sure that you print out documentation to support the amount of the balance being used, the account number (s), interest rate being used, federal interest rate for that date, your date of birth (and age), and the calculation of the required annual distribution you calculate using all of the above data.2009-06-22 19:44, By: dlzallestaxes, IP: [22.214.171.124]
L3: setting beginning amount for SEPPThanks for the quick reply, dlzallestaxes. So to make sure I’m ‘perfectly clear’ (if that’s possible) I couldn’t fix a date from say June 1st when the fund was peaking, and then start the first distribution in say Aug. or Sept. (in expectation of the midterm rate moving up to possibly 3.32%?) Would that be like having my cake and eating it, too? Does the IRA’s fixed value have to be set during the same 2 month period midterm rate that you will be using prior to the month you take the first distribution?
Thanks again.2009-06-22 23:20, By: mikek, IP: [126.96.36.199]
L4: setting beginning amount for SEPPNo, the interest rate month is not directly connected to your beginning account balance selection. So you can work both variables to your advantage within reason. Your beginning account balance should not be more than 6 months prior to your first distribution, but IN ADDITION, that balance must be reasonable according to 2002-62. While the IRS has not ruled on what is reasonable, I would be inclined NOT to push the envelope by selecting a date for the account balance when the balance is more than 20% above the balance when you order the distribution. Last fall the market free fall produced that exact situation. Hope this answers your question.2009-06-23 00:50, By: Alan S., IP: [188.8.131.52]
L5: setting beginning amount for SEPPThank you Alan and dlzallestaxes, that answers all of my questions.
2009-06-23 01:23, By: mikek, IP: [184.108.40.206]