use of Single Premium Immediate Annuity

L1: use of Single Premium Immediate AnnuityIs it possible to “unbundle” an IRA rollover account? For example, satisfy the 72t income stream with a single premium immediate annuity satisfying 5 years of income based on “total IRA holdings”, with the balance in a separate managed account?
Your help has been greatly appreciated.
2003-09-25 16:53, By: SPI, IP: [127.0.0.1]

L2: use of Single Premium Immediate AnnuityPLEASE.. for related posts and they do all appear to be related, make a follow-up post to the original. Don’t start a new thread unless the question is unrelated to the previous post.
Answer – yes, assuming the 5 year rule and not the age 59.5 ruledetermines the end point. However, if the SPIA is making the required SEPP payments, any withdrawals from the managed IRA account over and above the payments from the SPIA will BUST the SEPP plan.
2003-09-25 17:02, By: Gfw, IP: [127.0.0.1]

L2: use of Single Premium Immediate AnnuityDid you receive an answer to this question?2003-10-08 15:05, By: tpindy, IP: [127.0.0.1]

L2: use of Single Premium Immediate AnnuityI read the responce, do you have PLR’s or IRS sites to support this answer. I agree with your analysis however in discuss with ERISA attorneys they do not feel comfortable with this responce.

Thanks2003-10-08 15:07, By: tpindy, IP: [127.0.0.1]

L2: use of Single Premium Immediate AnnuityThen I guess that they should explain why they don’t feel comfortable with the response.
Assuming the SPIA is qualified as an IRA, it’s really no different than having multiple accounts and exhausting the funds in one before switching to the next.
BTW – ERISA really has nothing to do with a SEPP Plan unless the distributions are being made by an employer sponsored plan.2003-10-08 15:31, By: Gfw, IP: [127.0.0.1]

L2: use of Single Premium Immediate AnnuityThanks for your response.
The first question is the ability to aggregate IRA’s for the purposes of calculating minimum distributions. and the second is using an immediate fixed annuity for payment. The concern I am running into is that there is “no case law” to support the use of Immediate Annuity and if IRS would accept the aggregation of the other IRA account with the annuity once annuitization begins.
2003-10-08 15:36, By: tpindy, IP: [127.0.0.1]

L2: use of Single Premium Immediate AnnuityYou probably aren’t going to find any case law – you’ll have to look to previous PLRs for general guidance. Check out our FAQ, we probably have a few PLR numbers regarding the use of multiple accounts.
The annuity is a separate question with no PLRs that I know of. However, if the annuity is qualified as an IRA (or part of the funding of a Custodial Account) then please explain why there should be any problem. Two IRA accounts used in a SEPP with all payments distributed from only one of the accounts.
Why is there a concern if the payments from the immediate annuity are equal to the calculated annual payment (using 2002-62 Assumptions) from both accounts and makes the annual payment for the entire SEPP period?

2003-10-08 16:29, By: Gfw, IP: [127.0.0.1]

L2: use of Single Premium Immediate AnnuityThe first question is the ability to aggregate IRA”s for the purposes of calculating minimum distributions. and the second is using an immediate fixed annuity for payment. The concern I am running into is that there is “no case law” to support the use of Immediate Annuity and if IRS would accept the aggregation of the other IRA account with the annuity once annuitization begins.
For starters, there is no case law on either issue as there is almost no case law on 72(t) in its entirety. However, there are multiple (at least 1/2 dozen) PLRs on the aggregation of IRA accounts to determine a distribution plan. With respect to the annuity, I don’t see the issue, an annuity is a qualified investment product, just like a stock or bond, an is eligible to be held by an IRA.
TheBadger
wjstecker@wispertel.net

2003-10-08 18:16, By: TheBadger, IP: [127.0.0.1]