Is an SEPP distribution from and IRA Variable Annuity any different from an SEPP from an IRA invested in mutual funds? Can it be done by setting up a payment stream of systematic surrenders without annuitizing the contract? The owner is 53 now and once he reaches 59 1/2 he'd like to stop distributions and let the annuity IRA continue to accumulate.

This can be done. Issue was addressed in a 1998 PLR - I can dig up the PLR number if you need it.

A PLR # would be excellent. The client's CPA is confusing qualified and non-qualified annuities. Thanks!

Annuities which are SEP qualified follow the rules for SEPs. The usual "annuity rules" of IRC 72 (e.g.: "exclusion ratio", treatment of "gain") don't apply.

If it's a SEP or an IRA, it's a SEP or an IRA, no matter HOW it's funded.

John Olsen

Sorry, I should have been more clear. I was referring to Substantially Equal Periodic Payments, not Simplified Employee Pension.

Another way to state the question would be: Can the owner of a variable annuity IRA draw SEPPs without annuitizing the contract?

Yes, the owner of an IRA annuity can do S.E.P.Payments without annuitizing. Again, the IRA annuity is an IRA, subject to the 408 and 401(a((9) rules.

John Olsen