Late 40s retiree with SEPP/IRA question
Hello from San Jose, California, folks.
I am [about to turn] 46; my wife is 45. We hope to retire as soon as her current stock options mature, in about 18 months or so. Our plan is to use our pre-tax IRAs (rolled over from 401(k)s) to fund a SEPP plan, supplemented by after-tax savings to fill out our income and allow for the fact that an amoritized SEPP plan cannot increase with inflation/cost-of-living (grrr!), until she receives an inheritance that will complete our retirement picture.
Here's my question: Currently we have 4 pre-tax IRAs and 2 after-tax IRAs, all managed by Morgan Stanley. Each pre-tax IRA is handled by a different "money manager"; I pay a fixed percentage with no transaction fees to Morgan Stanley and they pay the money managers out of that.
From time to time, one of the IRAs will do better than the others and represent too large a percentage of our total investments, so we will transfer some cash from that winning IRA into one or more of the other IRAs to even out our investments and maintain the investment diversity that we want.
It is my understanding, however, that we would have to stop doing this or re-organize things completely to do an SEPP, because one of the ironclad rules for an IRA that is funding an SEPP is that there be absolutely *NO* monies transfered into or out of that IRA during the life of the SEPP plan.
So my question is: is it possible to treat a pool of IRAs as a single logical unit funding an SEPP, and move money around inside that pool as long as it doesn't leave the pool and new money doesn't enter? Or do we have to do something like create one monolithic pre-tax IRA by combining all of our existing ones, and then let Morgan Stanley figure out how to move money around between managers inside the same IRA account?
Thanks in advance for any help on this one. We plan to consult a tax attorney before engaging our SEPP because the penalties are so dire, but I'd like to have as much of an idea of what I'm up against before I do so. Tax attorneys can graduate with C averages just like certain politicians I could name, and with almost as disastrous results.
Hating the stupid obfuscating arcane IRS rules even more than usual this morning, and wasn't sure that was even possible,