The account balance used cannot be prior to any contributions or distributions from the IRA. It must also be “representative” of the current value of the IRA. While there will certainly be market changes to the value, what is representative of the current value has not been defined by the IRS. My guess would be any account balance that is more than 15% higher than the value on the date of the initial SEPP distribution would be entering a gray area. The following guidance on the account balance used for the SEPP calculation are copied from RR 2002-62:

(d) Account balance. The account balance that is used to determine payments must be determined in a reasonable manner based on the facts and circumstances. For example, for an IRA with daily valuations that made its first distribution on July 15, 2003, it would be reasonable to determine the yearly account balance when using the required minimum distribution method based on the value of the IRA from December 31, 2002 to July 15, 2003. For subsequent years, under the required minimum distribution method, it would be reasonable to use the value either on the December 31 of the prior year or on a date within a reasonable period before that year’s distribution. (e) Changes to account balance. Under all three methods, substantially equal periodic payments are calculated with respect to an account balance as of the first valuation date selected in paragraph (d) above. Thus, a modification to the series of payments will occur if, after such date, there is (i) any addition to the account balance other than gains or losses, (ii) any nontaxable transfer of a portion of the account balance to another retirement plan, or (iii) a rollover by the taxpayer of the amount received resulting in such amount not being taxable.

• Flag as spam
• Log in to Reply