Recalculation

L1: RecalculationI understand that there have been private letter rulings which allow a change to an existing 72t distribution because of increasing interest rates…If the exact same calculation methods are used, is it permissable to change one’s 72t distruibution amount on an annual basis as I have heard????2006-01-03 10:16, By: Bob, IP: [38.116.128.53]
L2: RecalculationThere have indeed been favorable PLRs issued on annual re-calculations.
However, they don’t really apply to existing plans. As an assumption, it must be included when the plan is initially adopted, not after the fact.
Further, when used, all factors must be entered into the recalculations, not just the interest rate.2006-01-03 14:03, By: Gfw, IP: [172.16.1.75]

L2: RecalculationI’m not sure I understand your response, ie. That there must be an “assumption” when the plan is opened to do annual recalculations…How would have I made such an “assumption” when I opened the plan??? It seems to me that the PLR allows for a change if the new balance is used, the new life expectancy is used and the new interest rate is used and the same calculation method is used…Am I wrong in this conclusion??? Thanks.2006-01-03 15:38, By: bob, IP: [38.116.128.53]

L2: RecalculationAssumptions are the factors that are used when the plan is designed interest rate, age, calculation date, etc are assumptions the result of the (assuming all are valid) assumptions is what would be known as Substantially Equal Periodic Payments.
Annual recalculation has nothing to do with increasing interest rates. Annual recalculation could involve increasing or decreasing rates – only the date of determination is known when implemented.
At the time when the plan is first’ implemented, annual recalculation can be one of the assumptions that would also state the date on which all recalculations are to occur. Once the plan is implemented, adding recalculation would change the assumptions and Bust’ the SEPP.
2006-01-03 16:31, By: Gfw, IP: [172.16.1.75]