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switch+to+rmd+method

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ByBulldog

L1: switch+to+rmd+methodcustomer+began+sepp+in+may+of+2007.%26nbsp++date+of+birth+2%2f2%2f1952.%26nbsp++distributions+were+based+on+the+amortization+method+and+are+taken+monthly.%26nbsp++customer+now+wishes+to+switch+to+the+rmd+method.%26nbsp++here+are+several+questions%3a%3cbr%3e%3cbr%3e1.%26nbsp++what+account+value+should+be+used+for+the+calculation%3f%26nbsp++based+on+the+fact+that+the+customer+started+in+may+of+2007%2c+i+have+assumed+that+her+payment+year+is+from+may+to+may%2c+and+on+that+basis%2c+i+used+the+account+value+on+the+day+immediately+preceding+the+monthly+payment+for+may+of+2008.%26nbsp++would+it+also+be+permissible+to+use+the+12%2f31%2f2007+fair+market+value+(2002-62+seems+to+allow+this)%3f%3cbr%3e%3cbr%3e2.%26nbsp++using+the+may+2008+account+value+and+single+life+expectancy%2c+the+rmd+method+yields+about+%2412%2c500.%26nbsp++from+may+2008+through+september+2008+she+has+taken+monthly+payments+totaling+%2411%2c500.%26nbsp++is+is+correct+to+say+that+in+order+to+make+the+switch+to+the+rmd+method+in+her+second+%22payment%22+year%2c+she+can+only+take+distributions+totaling+%241%2c000+until+may+of+2009%3f%3cbr%3e%3cbr%3e3.%26nbsp++as+a+general+question%2c+what+other+flexibility+does+she+have+when+making+this+switch%3f%26nbsp++for+example%2c+can+she+look+at+the+calendar+year+as+opposed+to+the+%22payment+year%22%3f%26nbsp++if+she+chooses+calendar+year%2c+her+payments+year+to+date+will+have+exceeded+the+amount+required+under+the+rmd+method.%26nbsp++will+she+have+to+wait+until+2009+to+make+the+switch%3f%3cbr%3e%3cbr%3e2008-10-02 05:41, By: bulldog, IP: [12.20.48.10]
L2: switch to rmd method>>can she look at the calendar year as opposed to the “payment year”?Individual taxpayers operate on a calendar year, not a fiscal or payment year – the SEPP also operates on a calendar year basis.>>will she have to wait until 2009 to make the switch?It depends on the dates of the distributions – if enough distributionsto qualify to be rolled over (back into the IRA)the change of methods could be made in 2008. Short of that, I would wait until 2009.>>would it also be permissible to use the 12/31/2007 fair market value (2002-62 seems to allow this)?The real question is whether the account balance on 12/31/2007 represents a reasonable representation of the account value on the conversion date.You have enough open questions that you may be better off making the change in 2009 and using teh 12/312008 as the balance on which to base your calculations.2008-10-02 09:34, By: gfw, IP: [98.214.144.242]

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