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|Subject: Re: Substantially equal periodic payouts||Date: 3/12/1999 8:44 AM|
|Author: TMFPixy||Number: 9089 of 77871|
Dr. Merot asks:
<<Q1: When I start the payouts, do they have to all be in cash? Could part of the payout be in securities with the value of the securities at withdrawl plus any cash equal to the payout?>>
It's possible, but I'm not sure what would be gained by doing so. You would have to get the broker to transfer whole shares to your taxable account. Your holding period starts on that date, and the share basis will be the market value on that day. Your 1099R for the distribution will include that total plus any cash sent to you, and that's the total reportable distribution on which you must pay income taxes.
<<Q2: If I want to help my son and daughter for graduate degrees ( i.e. books and tuition) through IRA withdrawl, do I need to count those help $$ as part of my SEPP or are they a separate permissible use?>>
What an interesting question. You're asking if you may use two of the exceptions to penalty-free withdrawals at the same time, one of which is the "substantially equal periodic payments option." The only interruptions to the latter that are authorized are withdrawals caused by death or disability. Any other distributions cause all prior SEPP withdrawals to be penalized. Therefore, because I find nothing in the Infernal (sic) Revenue Code to allow SEPP and education expense withdrawals to be made concurrently from the same IRA, IMHO you cannot do so without voiding the SEPP.
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