Divide an IRA and then immediately start SEPP on one accnt

Submitted by Chris Dobbs on Tue, 2017-12-12 16:13

Hi,

Probably a simple question:

I have a traditional IRA that I’d like to divide into two IRA accounts, and then a few days later start an SEPP plan on one of the two accounts, leaving the other available should I need access to it for a large early distribution.

Can I do this, no problem? No issue with the distribution for the rollover to the new accnt, followed by the first SEPP distribution? I assume the two accounts can be at the same investment house?

Thanks so much!
Chris

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Permalink Submitted by Alan - IRA critic on Tue, 2017-12-12 20:46

Not a problem. Partitioning your IRA into two accounts, one of which has a balance that produces the desired SEPP distribution is a wise strategy. It also produces another account to use for insuring against busting the SEPP. When splitting the IRA, use a direct trustee transfer instead of a 60 day rollover in order to save the one rollover for emergency needs. The account balance used for the SEPP account is after the transfer up to the date of the first SEPP distribution. The two IRAs can be at the same custodian or a different one.