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Thanks for that info. Would you please expand on this:

>>>>But this is a case where the position taken by the IRS seems to be contrary to what the Internal Revenue Code says.<<<<<

Section 408(d)(2) of the Internal Revenue Code says that for purposes of applying section 72 to amounts distributed from IRAs you treat all IRAs as a single IRA. The 10% penalty, and the exception for periodic payments, appear in section 72(t). Perhaps you can interpret the language in section 408(d)(2) as having a limited purpose, but the IRS doesn't discuss this in its rulings and that makes me a little nervous.

Also, you said:

>>>>>Given that the IRS has given the same ruling a number of times, it should be pretty easy (but not necessarily cheap!) to get your own ruling if you decide to go this way and the issue is still up in the air at that time.<<<<<<

...What is the normal process and fee involved in obtaining a ruling? I am still at least 10 years away from retirement; can I get a ruling for something that far in the future? Obviously, this will affect the way I save: If I can withdraw my IRA money early (in the manner that I wish), I will continue to make contributions. If not, I had better stop now and direct my contributions elsewhere. (Though I would *greatly* prefer the former.)

I doubt that the IRS would provide a ruling this far in advance. You would be asking them to rule on a possible transaction many years in the future which may never actually occur, and with their limited resources they generally refuse to rule in these circumstances.

KAT in Chicagoland
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