One of our tax partners heard that something has been released regarding recalculation (reduction) of the payment amount in an established series of substantially equal payments.

The specifics involve a situation where the market value of an IRA was severely reduced and there wouldn't be enough to fund the payments until the person attains age 59.5. If the recalculation is not allowed, the IRA will be drawn down to zero, thus triggering retroactive penalties. Apparently a PLR was issued.

Has anyone out seen anything on this? Thanks. Maverick

I know that there are some PLRs pending on this question. I know, because I submitted one of them.

To my knowledge, none of them have been published. However there is a 3 month gap between the date a PLR is issued to a taxpayer, and the PLR is published. So it's possible that someone out there has received a positive ruling on this subject, but I'm 99.9% sure that if one were published, I would have seen it.

Thanks Barry. It appears a local practitioner is jumping the gun a little - basing his information on conversations with the IRS that indicated a PLR might be approved.

There is sometimes a long distance between "might be approved" and an approved PLR.

FYI: there is an article in the Apr 02 issue of Financial Planning (P70) on 72(t) payments which quotes Bob Keebler " I have had additional conversations with the IRS rearding reducing [72(t)]payments. It now appears that it may be possible to reduce those payments to accomodate current market conditions through PLRs."

mbozek:

That's the person I was referring to. He works for a local CPA firm.

Bob and I have both spoken to IRS people and have been told the same thing. Bob and I have spoken to each other about these conversations.

However, there is a still a difference between an informal conversation and a private letter ruling. Hopefully, in the not to distant future we'll have the PLRs.

This (the attached PLR) does not address reduction in market value due to market fluctuation- instead it addresses reduction in market value as a result of assets leaving the IRA due to a divorce decree.. but I decided to add it anyway