withdrawals

L1: withdrawalsI have 3 seperate IRA’s and in 2001 I began equal 12 monthly distributions on 2 of the 3. In 2002 I continued the monthly distributions on my 1 IRA but wanted to delay the distribution on the other till 12/02 when I would take a full 12 months worth. Bottom line my distribution amount for 2001 will match for 2002 on each account but on the second IRA it will come in 1 check rather then 12. My finacial adviser tells me this is ok because my 1099 amounts will be identical and all the IRS cares about is that I withdrew substantially equal amounts. I am concerned after what I have seen on this site that this may not be true. Can you help me and advise what I should do if I have busted the plan. Thanks….and great site by the way 2002-03-30 08:48, By: ed, IP: [127.0.0.1]
L2: RE: withdrawalsI have 3 seperate IRA’s and in 2001 I began equal 12 monthly distributions on 2 of the 3. In 2002 I continued the monthly distributions on my 1 IRA but wanted to delay the distribution on the other till 12/02 when I would take a full 12 months worth. Bottom line my distribution amount for 2001 will match for 2002 on each account but on the second IRA it will come in 1 check rather then 12. My finacial adviser tells me this is ok because my 1099 amounts will be identical and all the IRS cares about is that I withdrew substantially equal amounts. I am concerned after what I have seen on this site that this may not be true. Can you help me and advise what I should do if I have busted the plan. Thanks….and great site by the wayYour financial advisor is correct. What matters is that you created a SEPP plan in 2001 and included in that plan IRAs 1 & 2. The distributions needed to meet the plan can come from either IRA 1 or 2 at any frequency and in any ratio; e.g. you could take 100% of the needed distributrions from IRA 1 leaving IRA 2 untouched in 2002 as long as in the aggregate, the correct amount was withdrawn.TheBadger2002-03-30 08:58, By: TheBadger, IP: [127.0.0.1]

L2: RE: withdrawalsJust want to make sure that I made my self clear in my previous message .Let me be more specific. Ira 1 began in 2001 with month distribution of 3333 and I have taken monthly distributions since 1/01. IRA 2 began at the same time with a monthly distribution of 1670 which I took monthly throughout 2001. In Jan 2002 I decided not to take this 1670 monthly , as I didnt need the money, but to instead take 1670×12 or 20,040 in one payment in December. This keeps my annual distribution the same 20,040 and my 1099;s will match for 2001 and 2002.Again my Advisor said this was ok as 1099 amounts will be identical and thats all that the IRS cares about. Do you agree…Thanks again… 2002-03-30 10:06, By: ed, IP: [127.0.0.1]

L2: RE: withdrawalsI agree with “theBadger”, you should have no problem. I always prefer to have the plan function 100% as adopted, but as long as the monthly payment x 12 was removed and there were 12 months in the year you should be ok.2002-03-30 10:11, By: Gfw, IP: [127.0.0.1]

L2: RE: withdrawalsThere are really three issues here:1. From which IRA (1 or 2) must or should the withdrawals come from given that 1 & 2 are part of the SEPP program and #3 is not?2. Frequency of withdrawals during the year?3. Amount of individual withdrawals?The law (by which I mean the IRC & related regulations) is very clear on #1 above; the withdrawals must come from either #1 or #2 but can do so in any ratio or distribution; e.g. all from #1 or all from #2 or 50/50 or 25/75; it just does not matter & is a 100% taxpayer election.With respect to #2 the law is less clear; it says “not less frequently than annually”. Therefore, we have an upper limit, but no lower limit (semi-annually, quarterly, monthly, randomly throughout the year) is clearly established. So what about the taxpayer that starts SEPPs and in the plan adoption, elects monthly equal distributions & then in year 2 switches to quarterly or otherwise front-loads or back-loads the distributions within the year. The conservative advisor will advise against doing so as potwentailly performing some sort of plan modification. The more aggressive advisor will advise to go ahead as it makes no difference; i.e. the 1099s will still add up to right amount at the end of the year. There is, at the moment, no obvious correct answer; however, my personal & professional opinion is that modifying the frequency of distributions within a year will not be problematic.Similarly, is suspect that the amounts of withdrawals during a calendar year can also be successfully modified as long as the aggregate of all distributions for the year add up correctly; however, one may run into a bit of an estimated tax withholding snarl here.TheBadger 2002-03-30 10:45, By: TheBadger, IP: [127.0.0.1]