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If I'm taking SEPPs from an IRA, can I still take another 'qualifying' withdrawal without getting penalized? I'm thinking about the Medical Expenses in excess of 7.5% AGI exception.

This question came up several months ago. The answer is no one knows. The whole concept of SEPP's is to create a closed group or universe of IRA's from which the SEPP's are withdrawn & are otherwise left alone. This would say NO to other withdrawals. OTOH, there is nothing that says you can't do this and there are literally no PLR's on point; this would suggest YES. The only law that is eve close on this are situations where IRA's are being broken up after SEPP's started and the SEPP's traveled with the IRA's ratably.

As a practical matter, it would be convienent to hold another IRA in reserve from which to make the medical withdrawals.

Lastly, by taking the medical withdrawal will not automatically put your return on audit alert, but your return will have some interesting numbers on it; particularly Form 5239. When reviewed you are going to have some serious explaining to do & you will be on the defensive. Balance this exposure against the real need to take the medical withdrawal.

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