Nice round numbers

L1: Nice round numbersA quick question. There was some disscusion about withdrawing a nice round number from your IRA. If I use the calculator here and had a balance of 500,000 at age 55 using the present rate of 6.03 the max withdraw woud be 36622.23. I would like to make it an even 3000/month.36000/year.I just set up my plan to withdraw 36000, correct?I don”t need to figure out the exact rate to make the withdrawl 36000. Correct?2006-11-11 09:15, By: John, IP: [68.75.161.229]
L2: Nice round numbers>>Correct? No.
Your withdrawal should be exactly $36,622.23 – you can ”fudge” to about $1, but no more. Go back and re-check your assumptions. If the assumptions used don”t equal the payment, it could equal problemsfor you.2006-11-11 09:26, By: Gfw, IP: [172.16.1.76]

L2: Nice round numbersHello John:
Gordon is correct. However, if you are wedded to nice round numbers, you do have an alternative. You could, using the numbers you supplied adopt a plan using an interest rate of 5.8691% (which is less than or equal to 120% on the mid-term applicable federal rate). Like magic, the annual distribution is $36,000.
TheBadger
wjstecker@wispertel.net

2006-11-11 09:34, By: TheBadger, IP: [72.42.67.137]

L2: Nice round numbersBill has one good alternative, here is another.
Use 6.03% and allocate $491,504.76 (atage 55)to an IRA to fund your SEPP and use the balance in a 2nd IRA account for emergencies, retirement, etc. – just like magic, an annual payment of $36,000 :~}

2006-11-11 09:44, By: Gfw, IP: [172.16.1.76]

L2: Nice round numbersThank you both for your response. I think Bill”s idea was what I was getting at. As long asI used a rate that was equal or below the current mid term rateI could get the amount I wanted, I just have to figure out the rate.I am starting my SEPP in January 2007 and using the balance from December 2006. I anticapate the balance being a few thousand dollars over the amountI need to meet my withdrawl amount. I think it would be easier to adjust the rate down on my calculation then to transfer a small amout to another IRA.(I do have a second IRA with a diffirent custodian for emergencies)2006-11-12 10:19, By: john, IP: [68.75.183.107]

L2: Nice round numbersHi John.Since you will have to wait until January, 2007, to make your final calculations, why don”t you consider using a combination of the ideas Gfw and TheBadger suggested?
Assuming the 12-31-06 value will be greater than your current $500k, then transfer some amount to your other IRA, and then use a percentage less than the 120% AFR for your calculations? This way you will fund more for your emergency IRA and you will be closer to the max percentage for the calculations?
Just a thought.
Jim2006-11-13 10:07, By: Jim, IP: [70.184.2.72]

L2: Nice round numbersThanks Jim, I actually plan on my balance and interest rate being very close to the maximum to achieve my withdrawal rate. I think it was you that got me thinking (worrying) about nice round numbers raising red flags.
Gfw”s first response kind of threw me off, my assumtions still seems correct to me. Maybe my last sentance should of said, As long asthe rate that I am using is equal to or under 120% of the midterm rate, and that rate allows me to withdraw 36000/year I”ll be OK.
I don”t have so much aconcern with taking an withdrawl that is 36622,23 instead of 36000. I just wanted to make sure thatmy thought processwas correct.
I view this sight every day and have read Bill”s book. There is alot of information thatI have picked up and just want to make sure I have a clear understanding of the 72t laws.
Thanks again2006-11-13 11:48, By: john , IP: [207.138.81.21]

L2: Nice round numbersMaybe my last sentance should of said, As long asthe rate that I am using is equal to or under 120% of the midterm rate, and that rate allows me to withdraw 36000/year I”ll be OK.
I would say you understand the concept.
Jim2006-11-13 13:17, By: Jim, IP: [70.184.2.72]

L2: Nice round numbersBadger:
How did you come up with the interest rate of 5.8691%? Did you use any of the calculators on this site? Or, is there a mathematical formula?
2007-01-26 10:58, By: Ken, IP: [63.162.143.5]