IRA account for SEPP
I have several IRA accounts with the same company. May I use one for SEPP purposes and still take money out of the others at any time and pay the 10% penalty fee without voiding the one account dedicated for SEPP? Also, if I take money out in SEPP distributions and (if possbile) money from the others (while paying a penalty) while I am working and have income at what point might I be at risk for AMT tax?
Permalink Submitted by Alan Spross on Mon, 2008-03-31 04:31
Yes to first question. Before you start the SEPP you can partition the accounts such that the one you elect to use for the SEPP has the balance needed to provide your needs over the term of the SEPP. Just be sure to keep them totally separate in all respects.
The AMT issue is impossible to answer since Congress deals with the exemption annually, and mostly at the end of the year. However, the AMT exemption is only part of the picture, with your exposure predicated on a complex mix of your income sources, types of itemized deductions, exemptions etc. To get a worthwhile estimate, you would need to enter your estimated 2008 income and deductions into current software and probably add an inflation increase to the exemption from 2007.
Permalink Submitted by George Parrish on Mon, 2008-03-31 11:46
alan-oniras, thanks for the answer. May I trade in the SEPP account such as holding an EFT and selling covered calls against it to add to the account value over time? What happens to the balance at the end of the five-year period?