What good are PLRs?

L1: What good are PLRs?If only the taxpayer who requested a PLR can use the ruling, what good arethey to anyone else? I am specifically referring to the PLRs on annual recalculation of a 72t plan using the amortization method. I had planned to start my plan next month based on the account balance at the end of May. However my IRA custodian says you cannot recalculate a SEPP payment and a PLR only applies to the taxpayer it was requested by. What are my options besides requesting my own PLR? Has anyone successfully implemented a SEPP with annual recalculation without having their own PLR?
If I start my SEPP anyway what defense of recalculation do I have if the IRS questions it and I cannot refer tothe PLR?I trade options in my IRA so my calculated payment maychange dramatically (I have a 25% gain so far this year), which will likely draw the attention of the IRS.
Tim2005-05-17 18:42, By: Tim, IP: [146.122.221.37]

L2: What good are PLRs?All PLRs are issued to the requesting taxpayer and can not be cited or quoted for argument. However, it gives the general thoughts of how the IRS is thinking at the time of the request. In fact, most PLRs end with the following statement. This document may not be used or cited as precedent. Section 6110(j)(3) of the Internal Revenue Code.
You can do about what you want- regardless of what your IRA Trustee/Custodian tells you- but, you may have to file IRS Form 5329 to claim your exemption. The IRA Trustee/Custodian merely codes your 1099 the way that it feels appropriate. If there is an audit, it is still up to you (regardless of what the IRA Trustee/Custodian says) to justify your position to the IRS.
Start by browsing the FAQ and then you may also want to purchase Bill’s book. The page titled Final Thoughts really m,akes it simple… The best advice is to use this site to do estimates and become knowledgeable on the subject, then “Hire a Pro” to do the work.
Good Luck! 2005-05-17 20:12, By: Gfw, IP: [172.16.1.79]

L2: What good are PLRs?GFW,
Thanks for the reply. I have read all of the FAQs and read all the messages to this board, so I am pretty familiar with all of the issues. What I still don’t understand is if the IRS issues a PLR on this subject which tells you how they view recalulation, why don’t they issue some type of ruling to clarify it and giveeveryone something touse?
I am not that concerned about getting audited the first year as the cost to bust is small, but in a few years that becomes a bigger issue. Again it would be nice to hear that someone else is doing this without the support of PLR.
Tim2005-05-18 14:08, By: Tim, IP: [64.109.42.130]

L2: What good are PLRs?Regardless of the “official” position on the use of PLR’s, the revenue code is subject to interpretation and PLR’s provide some interpretation of the code by the IRS.
Because the facts and circumstancescan vary significantly from one tax situation to another, the IRS pretty much has to issue the disclaimer on the use by multiple taxpayers.However, the underlying decision can be used as a valid interpretationof the code.
2005-05-19 06:32, By: GT, IP: [24.145.164.87]

L2: What good are PLRs?GT,
Thanks- that makes me feel much better since my situation is exactly the same as PLR 200432024 except my valuation date will be May 31 instead of Dec 31.
Tim2005-05-19 15:34, By: Tim, IP: [65.29.207.205]

L2: What good are PLRs?If it was my plan, I might use the mid-yeardate for the first year and then I would make the change for each following year to 12/31. Just my thoughts 2005-05-19 16:01, By: Gfw, IP: [172.16.1.78]

L2: What good are PLRs?Gordon:
If Tim wants to start his SEPP next month (June), wouldn’t a valuation as of May 31 be acceptable?
2005-05-19 21:44, By: GT, IP: [24.145.164.87]

L2: What good are PLRs?May 31 could be used. My only point in switching to 12/31 for each year after the first was to make the plan apear more like the plans approved in the PLRs. And, after the first partial year, the plan is a calendar year plan.2005-05-20 04:07, By: Gfw, IP: [172.16.1.78]

L2: What good are PLRs?Good point GFW. I re-read the PLR last night and to match it even more closely I think I will start my SEPP now based on a Dec 31, 2004 valuation and Dec 04 interest rate of 4.28%. Next year and following I will recalculate based on prior year Dec 31 valuationsand distribute in January. Correct me if I am wrong, but it does not matter when during the year I take the annual distribution (June this year, January next year and thereafter)? And the PLR says they were using a Dec 31 interest rate, which I assume is the December rate you publish?
The LESS aggressive the plan, the better, the way I see it.
Tim2005-05-20 08:20, By: Tim, IP: [146.122.201.151]

L2: What good are PLRs?Careful_ Remember thatthe interest rate used can’t be any higher than the published rates for either of the 2 months preceding the first distribution.2005-05-20 09:39, By: Gfw, IP: [172.16.7.101]

L2: What good are PLRs?I don’t understand- the Dec 04 rate of 4.28% is LOWER than the April or March 2005 rate, and my first distribution is in May 2005. Are you saying I should use an April or March rate? If I do use April or March I still can base the payment on the value on Dec 31, 2004?2005-05-20 09:54, By: Tim, IP: [146.122.201.151]

L2: What good are PLRs?Gordon:
Starting SEPP requires using the 120% AFR rate for either of thetwo months immediately preceeding the month of first distribution. So if the first distribution occurs in June, either April or May rates may be used.
If you are going to use Recalculation and begin basing the second and subsequent yearsdistributions on the 12/31/xx date, what 120% AFR do you use? Are you tied to the original April or May rate, or do you change to Nov or Dec forthe newdistributions which begin in January?
I’ve never gotten this point nailed down.
Jim2005-05-20 11:33, By: Jim, IP: [70.184.1.35]

L2: What good are PLRs?Since the question has never been addressed in a PLR, etc. the only way to nail it down would be to request a PLR based on the ‘Facts & Circumstances’.
If it were my plan, After any first partial year I would move all the variables to a common time, lile the previous December and do the re-calculation during each January. In the first year assuming the first distribution is in June, I would also use a common time frame like 5/31 and the rate for either April or May. 2005-05-20 11:49, By: Gfw, IP: [172.16.1.78]

L2: What good are PLRs?I have decided to use the April or May interest rate and 12/31/04 valuation for this year’s distribution and the 12/31 interest rate and 12/31 valuation for subsequent years. 2002-62 says in the example that you can use anything from 12/31/previous year to the current date for the valuation date (within reason). This way my valuation date is always the same and matches the PLR. There is no way to match the interest rate date the first year unless I wait until next year, which I don’t want to do.2005-05-20 13:42, By: Tim, IP: [146.122.201.151]