72(t) – account balance
Good Afternoon
What is the correct method for determining the IRA account balance – 72(t) payments
IRS.gov FAQ’s states….
How is the account balance determined?
The account balance may be determined in any reasonable manner based on the facts and circumstances.
whereas www.72t.net states
Q. What account balance should be used?
A. You should use you account balance as of December 31st of the previous year.
Any and all guidance is appreciated.
Thank you
Permalink Submitted by Alan - IRA critic on Sat, 2014-08-02 00:17
The 72net statement only indicates that the 12/31 balance was considered valid per RR 2002-62 for an RMD calculation for a plan started in July. There is no requirement to use the prior year end date. More important, the value used must be a reasonable representation of the current value of the account. The IRS has never defined “reasonable”. Any value that is more than 15% above the current value stands a good chance of failing to be considered reasonable. Therefore, in times of large market drops, you are forced to use a balance that is quite recent, maybe even the last day of the prior month. You can also used the prior day’s value if you want and can document it by a screen print of your account. There cannot be a non SEPP distribution or a deposit to the account after the date used for the account balance. If a taxpayer uses more than one account for a single SEPP, the balance must be on the same date for each account.