Can a person who has already begun to take substantial equal periodic payments contribute to that IRA even if he has chosen the RMD method?

To my knowledge the IRS has not given any indication that furture IRA contributions would in any way "modify" substainally equal payments. As for the RMD method, it will only effect it to the point that the 12/31 balance you are using to recalculate the distribution amount for that year will be $2,000 greater.

Furthermore, if there is a concern that the additional contributions would increase the distribution more than desired, why not open another IRA to which the future contributions are made and continue the substantially equal withdrawals from the previously existing IRA(s). I have seen PLRs allowing substanially equal withdrawals based on a single IRA while other IRAs of the same individual remain untouched, growing on a tax-deferred basis.

To me, RMD means "Required Minimum Distribution" and is associated with the RBD (i.e., Required Beginning Date). Thus, we are speaking of substantially equal payments to an individual who is in or has past his "70-1/2 year."

If this assumption is correct, new contributions are not to be deposited to a "traditional" IRA in the year of attaining age 70-1/2 or thereafter. Should you still deposit funds to the traditional IRA in this situation, such funds will be regarded as "excess" contributions and subject to penalties.

If the individual is under age 59-1/2, distributions could be made under the "substantially equal payment" penalty exception. There is a 5-year rule associated with this method for added complexities.

Since the above described distribution is not based on a "Required Minimum Distribution," an additional contribution to another Traditional IRA should be fine. [Note: Since the dollar amount of a "substantially equal distribution" is determined under one of three IRS approved methods, such amount/method cannot be modified for 5-years, with certain exceptions.]

Refer to IRS Publication 590, entitled "Individual Retirement Arrangements (IRAs)"