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Using a SPIA for SEPP Distributions

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ByAlan

L1: Using a SPIA for SEPP Distributions
Assume thata 53 year oldhas an IRA with a value of $100,000,that the SEPP calculation method chosen results in an allowable annual SEPP distribution of $6,000 (I”m using round numbers to keep it simple) andthat the SEPP distributions must continue for 7 years to meet the “for 5 years or until 59 1/2” requirement. If this person uses a portion of the $100,000 to purchase a 7-year period certain SPIA that pays exactly $6,000/yr for 7 years, and then puts the balance of the money in a separate deferred annuity policy, will this person qualify for 72(t) tax treatment, or will the IRS say “nice try, but you can”t do it that way”?2007-02-07 14:15, By: Alan, IP: [69.38.115.33]

L2: Using a SPIA for SEPP DistributionsIf both Annuities are in the same IRA Custodial Account, then you should have no problems since the SPIA is merely a funding vehicle inside the account.
Best option here to keep it nice and clean is tohave the 7-year annuity paid back into the CustodialAccount and then take a distribution just like you would from any other SEPP.

2007-02-07 14:21, By: Gfw, IP: [74.136.109.63]

L2: Using a SPIA for SEPP Distributions
Thanks for your quick response. This is the first time I”ve visited your website. It”s by far the best source of info I”ve seen on 72(t)s . . . thanks for sharing your knowledge.2007-02-07 14:29, By: Alan, IP: [69.38.115.33]

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