72t, can I choose the amount I want?

L1: 72t, can I choose the amount I want?I could really use some help here. I knowa bit about 72t having been in the financial services industry. So I know that there are three methods that can be used for calculating distribution amounts. My question is this:
Can a particular amount be chosen? Let”s say the Amoritization is showing over $2,000 a month and the minimum funding option is showing only around$1,000, but I need to withdraw $1,500/mo, can I do so? I know I can”t choose an amount that is at total random, like $10,000 let”s say. But can I choose a particular number that falls between two of the calculation numbers? I”ve been unable to find an answer for this anywhere on the net. Your help is greatly appreciated.
Thanks!2008-01-10 12:25, By: beatnik, IP: [205.188.117.206]

L2: 72t, can I choose the amount I want?The easy answer is NO. The better question is “how can I get the distribution I want?”
Tryadjusting the interest rates aroundto get you the figure you want, If the amount you want is significantly less than the maximumfigure you calculate, then do not use all of your IRA balance(s) in your calculation. In your situation, just use 75% of your balances using the Amortization method, and you will get $ 1,500 if the maximum is $ 2,000. But since you said that it is “over $ 2,000/mo.”, then use less than 75%, possibly 70%, etc. Use the “reverse calculator” on this site, and you can get the balance needed to get the monthly payment you want.2008-01-10 14:26, By: dlzallestaxes, IP: [151.197.23.84]

L2: 72t, can I choose the amount I want?I would use the maxium interest rate allowable – requires less cash and then use the remainder in a new IRA for emergencies.
When you partition your IRA to come up with the amount required for the SEPP, make sure that you actually move the non-SEPP part to a separate IRA with a separate account number.
2008-01-10 14:32, By: Gfw, IP: [74.136.102.241]

L2: 72t, can I choose the amount I want?First of all, let me say thank you very much for your responses. It”s great to know people are willing to take their time to help. I must say though, I am still a bit confused. First of all I didn”t think I could adjust the interest rate? I thought I had to use 120% of the midterm rate from either this month (Januray) or the two previous months. If that isn”t the case than what guidance do I use in choosing an interest rate that is different than those three options?
Secondly, I realize that I probably should have given more specifics. The end of year balance on the account was $426,923. I calculated it using current year age, which is 57. The beneficiary”s age is 57 also. Perhaps this information will be helpful in assisting.
Now, all of the money is in one IRA Rollover account so I can”t pick and choose IRA balances to use. So I lose the option of using the reverse calculator. Darn, because that was a good idea.
I also think that the idea of leaving a certain amount in one IRA and moving the rest to another in order to reach my number is quite an original one. Interesting out of the box idea I hadn”t thought of. The thing is though that I finally succeeded in combining all of my IRAs, I”d like to avoid breaking them up. But it does exist as an option I guess. The question remains, are there other options than this? Can I get to my $1,500 a month number without having to split the IRA up?
Your continued feedback is greatly appreciated,
K2008-01-11 13:46, By: beatnik, IP: [205.188.117.206]

L2: 72t, can I choose the amount I want?Why are you so reluctant to split your IRA into 2 accounts, at the same company ? It is really no big deal. You just tell them which investments to transfer to the SEPP 72-T account, or more probably, move the “unneeded” lesser amountto the non-SEPP 72-T account, andleave the larger amount inthe account and have themlabel it as your”SEPP 72-T”.
HOWEVER, if you have any resources, including home equity loans/line of credit, then you should consider not setting up a SEPP 72-T plan. Use these other funds to get you to 59 1/2. This way you will not be locked into 5 YEARS during which time you cannot change your annual distribution. At 59 1/2 you have complete flexibility to take -0- or all of your IRA in any year, until you reach 70 1/2, when there is a REQUIRED MINIMUM DISTRIBUTION o about 4%/year. There are numerous postings already which discuss this common recommendation for people at your age.
As far as interest rate, there is a range of interest rates NOT TO EXCEED 120% of the rate in the most recent 2 months. If you cannot avoid the SEPP, then split your IRA using the reverse calculator.2008-01-11 14:10, By: dlzallestaxes, IP: [151.197.37.164]

L2: 72t, can I choose the amount I want?Let”s start with the age you listed. Will you be 58 in 2008? It is based on “attained age” in the year you start. If so, that is the age to use. If not, use 57. Using reverse calculator, I got a needed “starting balance” (for AMORTIZATION) as follows to generate $1500 per month or $18,000 per year:
if 57 $259,777.80
if 58 $255,932.00
These used a max rate of 5.28%. I am guessing that is the NOV rate that will only be good for plans with first payment made by 1-31-08. December rate is less as I recall, in case you can”t get plan setup and first payment made by end of this month, thenredo the reverse calculator stepbefore breaking the IRA into two accounts. (They can be with same custodian as long as diff Acct#s and monies are not commingled while SEPP is running, and custodian needs to understand this.) If you partition into 2 IRA”s and fund one with the balance listed above (or from recalc) that applies to you, the other IRA will be your cushion. That means while SEPP is still running and your are 60 or 61, or 62and you need some money, take it out of other IRA with NO PENALTY and without disturbing the SEPP plan. Some people think you should avoid locking yourself into taking SEPP withdrawals if so close to age 59 1/2, but I think if you select a withdrawal amount that is the minimum that is going to be needed anyway on an ongoing basis (at least for those SEPP years after 59 1/2–in your case for five years total from when you start) then no harm is done and noextra tax incurred. Good luck. I have 2 SEPP plans and I have 3 IRA”s so there is still one in the wings if needed after 59 1/2 but before SEPPs end when I am 61 and 62, respectively. KEN2008-01-11 14:58, By: Ken, IP: [75.67.65.254]

L2: 72t, can I choose the amount I want?Thanks again so much for your responses. I finally feel like I”m getting somewhere. We”re close now but I need your help with one final calculation. But first, thanks for the idea of splitting the IRA but for personal reasons I prefer not to discuss (I”m married, let”s put it that way), I cannot split the IRA. So sticking the the other idea, now I just need to figure out what a “reasonable interest” is to meet my calculation.
I”m 58, my beneficiary is 58. I need $18,000 a year ($1,500/mo.). The account balance is $426.923. Now the question is, what rate would I need to input in order to come out with $1,500 month? And furthermore, is that rate “reasonable?”
I”m almost there! Your final bit of assistance would be greatly appreciated.
Thanks,

K2008-01-16 10:30, By: beatnik, IP: [205.188.117.206]

L2: 72t, can I choose the amount I want?Splitting an IRA of $ 500,000 into two IRAs with $ 300,000/$200,00 or $ 400,000/100,000 accounts does not change anything legally, other than allowing you to “secure” your SEPP 72-T only with the amount you need for the balance for the calculation to get the distribution you need. You do not need your spouse”s approval to do this, there is no joint ownership of IRAs, and unlike company retirement plans, you can designate anyone you want as the primary beneficiary and/or secondary beneficiary. This gives you the flexibility to take additional amounts from the non-SEPP account without “busting” your SEPP 72-T.2008-01-16 14:12, By: dlzallestaxes, IP: [151.197.162.165]

L2: 72t, can I choose the amount I want?DL- Thanks for your continued responses. I am not going to be splitting my IRA. No need to discuss it further. If you feel as though you can answer my question, great. Otherwise, thanks for your time. Hopefully I, or someone else out there (Ken, you still kicking?) can figure out the necessary rate and whether it is acceptable. Thanks again for your time.
K2008-01-16 19:55, By: beatnik, IP: [205.188.116.131]

L2: 72t, can I choose the amount I want?Any rate between 0 and the max can be used.
Start with the calculators, enter your information and then start varying the interest rate until you come up with an annual distribution of $18,000/Year. You will probably not hit $18,000/year exactly, but you should be able to come close.2008-01-17 02:25, By: Gfw, IP: [74.136.102.241]

L2: 72t, can I choose the amount I want?GFW”s answer is the correct one for the information you have provided. I ran the calculator with $426,923, your age 57, and the Amortization method which gives the greatest distribution amount of the three. (Keep the RMD method in reserve if you ever need to use the “one-time switch”in the future.) Here”s what I got:
Age 57; $426,923 balance; 1.16% which is well below the 120% figure and is perfectly legal; annual distribution of $17,999.20. Then I reviewed both of your posts with ages and found the latest is 58 and 58. So I”ll let you run the calculator with the age you want and you can determine which percentage to use to get the amount closest to the desired $18,000.00.
Good luck.
Jim2008-01-17 06:36, By: Jim, IP: [24.252.195.14]