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Original Message Posted By: Jim Date: 5/15/2009 1:50:11 PM Subject: Benz v. IRS Good morning Alan: I think we are all going in the same direction with this concept. Let me try an example to see what you think. Assume a 58 year old starts a SEPP IRA which will terminate at age 63, and he has a separate, Non-SEPP IRA. At age 59 he takes a penalty-free, first-time home buyer distribution from the Non-SEPP IRA. Then at age 62 he takes a distribution from the SEPP IRA for education which, following the Benz Case logic, is also penalty-free. We now have two different controlling elements to determine penalty-free status of the distributions. Age 59 1/2 is the controlling element for the Non-SEPP IRA, and the 5 years of distributions, not age 59 1/2, is the controlling element for the SEPP IRA. Of course if the SEPP IRA were started at age 51 and a distribution was made at age 55, then age 59 1/2 would control since the 5 year requirement would be satisfied first. Thoughts? Jim
Good morning Alan:
I think we are all going in the same direction with this concept. Let me try an example to see what you think.
Assume a 58 year old starts a SEPP IRA which will terminate at age 63, and he has a separate, Non-SEPP IRA. At age 59 he takes a penalty-free, first-time home buyer distribution from the Non-SEPP IRA. Then at age 62 he takes a distribution from the SEPP IRA for education which, following the Benz Case logic, is also penalty-free.
We now have two different controlling elements to determine penalty-free status of the distributions. Age 59 1/2 is the controlling element for the Non-SEPP IRA, and the 5 years of distributions, not age 59 1/2, is the controlling element for the SEPP IRA. Of course if the SEPP IRA were started at age 51 and a distribution was made at age 55, then age 59 1/2 would control since the 5 year requirement would be satisfied first.
Thoughts?
Jim