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Author: goingfishin Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 734717  
Subject: 72(t) SEPP rate questions Date: 1/14/2000 8:37 AM
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I 'retired early' last year and I'm about to start taking SEPP payments from an IRA using the amortization method. The calculations are easy, but I have several questions about what rate to use.

Do I use the Federal rate in effect at the time of my account balance(12/31/99), the time I make the calculation and submit the forms(1/00), or the time I receive the 1st payment(2/00 or preferably 3/00)?

The Jan 2000 Federal table 1 includes a 120% rate of 7.77, while 1.2 times 100% rate(6.45) equals 7.74(also used by the Retire Early Java calculator). Which can I safely use(and why the difference)?

Vanguard's instructions say I can take quarterly withdrawals. If I choose that option, do I have to calculate the amount using a different rate(the table shows semi-annual, quarterly, and monthly rates) and life expectancy, or am I OK as long as I take 4 payments this year equaling the yearly calculation?

Thanx :)
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Author: TheBadger Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2190 of 734717
Subject: Re: 72(t) SEPP rate questions Date: 1/14/2000 9:02 AM
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Since the dates are so close, it will nto matter which AFR you use. Were the timing to be more distant, then I would suggest you use the rate right before your fist distribution.

I to don't know why the difference between 7.77% & 7.74%. Again, I don't think it matters.

Lastly, you get to make your own calculations using whatever frequency you like but always (in)directly winding up with an annual withdrawal amount. Then, you determine how to satisfy that annual amount through 1 to 100 withdrawals.

TheBadger


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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2194 of 734717
Subject: Re: 72(t) SEPP rate questions Date: 1/14/2000 11:52 AM
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goingfishin asks,

The Jan 2000 Federal table 1 includes a 120% rate of 7.77, while 1.2 times 100% rate(6.45) equals 7.74(also used by the Retire Early Java calculator). Which can I safely use(and why the difference)?

I've noticed the same thing. The algorithm the IRS uses to determine 120%AFR always seems to yield a number a few hundreths of a point higher than multiplying 100%AFR times 1.2.

I agree with TheBadger that the difference can be ignored, especially if you're using the lower number.

intercst



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