SEPP Beginning Date

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L1: SEPP Beginning DateIn March, 2010, I created an IRA Rollover with the balance from my 401k. I have a valuation of the IRA R/O as of 3/31/10 and want to begin SEPP distributions in June 2010 based on the 3/31/10 valuation. My plan is to take an initial distribution of 6 months payments in June 2010and then go to monthly starting in July 2010 so I take a full year of distribution in calendar 2010. It occurred to me, though, that the IRA R/O would not be existance for the full calendar year 2010. So my question is does this matter for my purposes?2010-05-02 15:05, By: BKS, IP: []
L2: SEPP Beginning DateNo, that does not matter. The only thing that would affect your account balance date selection would be market events that resulted in the 3/31 value to be substantially different than the value in June on the date you ordered your first distribution. What is a substantial difference? There is no specific guidance on that, but my guess is that you would be safe with a difference of around 15%. When the difference exceeds 20%, you could be on thin ice. One way to stabilize values would be to change your investments so that you do not have highly volatile holdings in your IRA. You could then go back to those investments if you thought it prudent AFTER your plan has been initiated.2010-05-02 23:07, By: Alan S., IP: []

L3: SEPP Beginning DateThanks for the response. I do appreciate your help. While I would love it if my IRA R/O were to be 20% higher in June, that’s probably a slim possibility as is a 20% lower value. Would it just be safer to wait until I have a May 31 value and base the distribution on that? For that matter, I’ll have March, April and May values before I begin distributions. Can I select the valuation that is most beneficial as long as there isn’t a substantial variance in the values?2010-05-02 23:37, By: BKS, IP: []

L4: SEPP Beginning DateYes. Some people even take it down to the highest daily valuation and that is OK as long as they have a statement or print out of the account at the end of that day. You would need to preserve a copy of that website page showing the total value of the account as part of your documentation of your calculations.For a 401k rollover, you can sometimes have “trailing distributions”, for example a dividend paid on a stockor monthly bond fund interest paid at the end of the month. These distributions normally will follow the original rollover into your IRA and change the account value. It is best to make sure all this activity is complete and NOT use an account balance prior to the date of the last funds rolled into the IRA.Note that your choice of interest rates is formally dictated by the month of your first distribution but the account value is NOT. If you are trying to squeeze max dollars for your SEPP payment out of the account, you have to reflect the requirements for both variables in selecting the initial month to start the plan.2010-05-03 20:10, By: Alan S., IP: []