The limitation on modifications begins on the date that you receive the first distribution under the SEPP. However, a SEPP distribution and an earlier distribution in the same year will both be reported combined on a single Form 1099-R, so it make it a little more difficult to substantiate that the rule against modification was not violated. You could avoid this complication by trustee-to-trustee transferring to a new IRA the amount that will be used to establish the SEPP plan. You mentioned that you would effectively be basing your SEPP distributions on an interest rate that is only about 3/4 of the rate permitted, so it would give you more flexibility to transfer 3/4 of the existing IRA to a new IRA and establish the SEPP plan on the new IRA using the maximum interest rate permitted. This would leave you with 1/4 in the original IRA that you could access without busting the SEPP plan, although such distributions would be subject to the 10% early-distribution penalty unless you have another exception that applies.
