sepp distribution discrepancy

L1: sepp distribution discrepancyi am retiring in a year and plan to 72t a lump sum to help finance a luxurious lifestyle of Schlitz, NASCAR and cat food meatloaf till the 1st of the month. I am curious about the assumptions. 1. do i want too much from life? 2. is the current 120% figureof 6.09% the maximum allowable assumed rate of return on the investment? 3. am i able to use any of the multiple tables listed at this site to figure life span, oram ionly able to use one of theirrationally optimistic IRS tables? 4. does the 120% figure fluctuate alot in a year”s time? thanks for any input.2006-08-08 18:10, By: shortimer, IP: [216.79.16.219]
L2: sepp distribution discrepancyHello Shortimer:
You actually sound somewhat bitter & you haven”t even started your SEPP plan. To your questions:
1. Only you can decide.
2. It is actually 6.27% at the moment and it may go up or down in future months & years. This not an assumed rate of return on investment; it si simply the maximum allowed under Revenue Ruling 2002-62 as the interest rate assumption used in the amortization and annuitization formulas. Furthermore, why the IRS choose 120% of mid-term applicable federal rate will likely never be known; however this rate is a very accurate reflection of mid-term rates in the marketplace as it is calculated by the Dept. of Treasury using actual market rates.
3. You can use any of the three tables: single, J&S or Uniform. However, these tables are not “irrationally optomistic”. They are actual as they are computed once every 10 years based on the most recently completed census; in this case, 2000.
4. Within a year the AFR”s can easily move a full percent or more in either direction. How they move and how much they move is entirely a function of market rates of interest on US government obligations.
TheBadger
wjstecker@wispertel.net
2006-08-08 18:36, By: TheBadger, IP: [66.109.211.254]