Join Early Retirement Today
Thread Tools Search this Thread Display Modes
split IRA accounts for 72t withdrawals?
Old 03-20-2004, 08:57 AM   #1
Dryer sheet wannabe
Join Date: Feb 2004
Posts: 21
split IRA accounts for 72t withdrawals?

I was planning to start a 72t SEPP (substantially equal periodic payments) withdrawal , to start drawing out
some of the money while I am in a low tax bracket.

My tax advisor says that I have to calculate the withdrawal amount based on the total amount in my IRAs, not on the one account that I was planning to set up with an amount that would be tuned to the withdrawal I wanted.

I've done alot of searching and seen it both ways - use the IRA 'account' value or use the IRA 'plan' (total) value.

Has anyone done this based on just one partial account? Or does anyone know a reference to an IRS private letter ruling that says you can use the partial account?

lb is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: split IRA accounts for 72t withdrawals?
Old 03-20-2004, 11:13 AM   #2
Recycles dryer sheets
Join Date: Dec 2002
Posts: 290
Re: split IRA accounts for 72t withdrawals?

I know that you can divide your IRA into several accounts and treat them differently. The SEPP rules apply to each one separately. You can leave one account untouched while drawing another down to zero.

In fact, knowledgeable people recommend that you have multiple IRAs because of this.

The expert on this matter calls himself TheBadger. I know that there are some free articles about SEPPs at

[Surprising to many, the IRS aligned itself with taxpayers during the market declines after 2000. They made some special rules allowing investors to reset their payment amounts after their portfolios took a big hit. Otherwise, they would have had to pay penalties for failing to maintain withdrawals beyond the time that their account balances hit zero.]

Have fun.

John R.

JWR1945 is offline   Reply With Quote
Re: split IRA accounts for 72t withdrawals?
Old 03-20-2004, 03:12 PM   #3
Recycles dryer sheets
Join Date: Feb 2004
Posts: 178
Re: split IRA accounts for 72t withdrawals?

The best website about SEPP is Bookmark it. It's full of good info.

If you look through the FAQs, you'll see this:

Q. Do All IRA Accounts have to be combined to determine the amount of the distribution?
A. Individual retirement plans do not have to aggregated for purposes of calculating these payments. If a taxpayer owns more than one IRA, any combination of the taxpayer’s IRAs may be taken into account in determining the distributions by aggregating the account balances of those IRAs. PLR 9050030

Q. Can a portion of an IRA account be excluded from the calculations?
A. No, the entire account balance in each of the pertinent IRA's must be taken into account. A portion of one or more of the IRAs may not be excluded in order to limit the periodic payment to a predetermined amount. PLR 9705033

Q. If I include more than one account, which accounts do I use to make the payments?
A. If two or more IRA's are used in determining the substantially equal periodic payments, the distributions need not be made from all of the included IRA accounts. The distributions may be made solely from one of the accounts, or from a combination of the accounts. PLR 9705033

You have considerable flexibility.
I'd rather be sailing.
nfs is offline   Reply With Quote
Re: split IRA accounts for 72t withdrawals?
Old 03-21-2004, 02:01 AM   #4 Founder
Developer of FIRECalc
dory36's Avatar
Join Date: Jun 2002
Posts: 1,824
Re: split IRA accounts for 72t withdrawals?

...Has anyone done this based on just one partial account? ...
I moved assets among several different IRSa so that one would contain the amount I wanted to start with, and then calculated and withdrew the SEPPs from just that one IRA. As JWR1945 said, TheBadger is the expert. He used to have a very detailed online book on the topic; not sure if he has updated it lately or not, but it is/was at the Retire Early Home Page that JWR1945 linked.

Often uninformed, seldom undecided.

Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover. Mark Twain
dory36 is offline   Reply With Quote
Re: split IRA accounts for 72t withdrawals?
Old 03-26-2004, 12:24 PM   #5
Posts: n/a
Re: split IRA accounts for 72t withdrawals?

thanks for the replies. I think I will go ahead and set up the withdrawal. Now off to set up health insurance, for when my Cobra runs out in August!
  Reply With Quote


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
AA & withdrawals between taxable and non taxable accounts. ron244 FIRE and Money 14 05-18-2007 05:59 PM
Help! SEP IRA was transferred into a Traditional IRA...bad? soupcxan FIRE and Money 5 12-19-2006 11:19 AM
Tax-Efficient Sequencing of Accounts ats5g FIRE and Money 5 11-02-2006 12:42 AM
IRA Withdrawals haha FIRE and Money 4 11-26-2003 05:20 AM


All times are GMT -6. The time now is 10:22 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.