Hello all:

I recently read a court decision on the web about a
man who received his first SEPP distribution in Decemberof 1989 and four subsequent distributions in
January of each of the following years. No problem.

THE LANDMINE! Figuring he had met the SEPP 5 year requirement and now, at 59 1/2, was age qualified to
make whatever withdrawls he wanted, he took a 6th
withdrawl in November 1993 and got
hit with a 10% penalty on all his SEPP withdrawls by the IRS.

The IRS reasoned that he had violated the SEPP rules
because the 6th withdrawl occurred WITHIN the five years. They calculated the five years as BEGINNING WITH THE DATE OF THE FIRST WITHDRAWL AND ONLY ENDING 60 MONTHS LATER. According to them he was not eligible
to take an "age eligible withdrawl" until December of 1994. Even though he had made 5 withdrawls in each of five calendar years, they were actually made within a period of of only 37 months. According to the IRS he should have waited until AFTER the date in December of
1994 that marked 5 full years from the date of the first distribution.

I would conclude from this that the IRS formula would
apply at whatever age you started withdrawls and further conclude that turning 59 1/2 after beginning
SEPP withdrawls does not automatically mean you can withdraw money from an IRA without possibly getting
slapped with a penalty.

The easiest way to find the source of my information is to go to www.google.com and in search type:

VIII Excise taxes on distrubutions

ttjasi