Reasonable interest rate

L1: Reasonable interest rateTwo questions.
1. I understand that the reasonable interest rate one would use to calculate your 72t distribution is either of the two preceeding months 120% rate. Is it your choice or do you use the lesser of the two?
2. It looks to me that there is a rate specific to the type of distribution i.e. monthly, quarterly, etc. Is this true?2005-08-10 22:18, By: DJ, IP: [69.0.25.131]

L2: Reasonable interest rateOnly the maximum rate is limited – anyrate lower than the maximum can be used.
It isn”t necessary to adjust the annual rate since the plan implemented is really based on an annual distribution. For monthly distributions, merely divide the annual distribution by 12.2005-08-11 04:11, By: Gfw, IP: [172.16.1.70]

L2: Reasonable interest rateI question your “divide by 12” advice.
The IRS Federal Mid-Term Rate postings offerDIFFERENT rates each month based on different distribution schedules (annual, quarterly, monthly, etc.).
Please review your answer.
Thanks!
MG / BamaAdvisor2005-11-10 11:48, By: BamaAdvisor, IP: [216.248.170.201]

L2: Reasonable interest rateThere have been a variety of PLRs issued using the divide by 12 method. In fact, when calculating a SEPP, the only certain payment is the annual payment. It can be taken in an annual amount, in equal amounts or in non-equal aqounts as long as at the end of the year, the annual amountis taken. If you adjust the interest rates, how would you switch from annual to monthly or monthly to quarterly, etc. 2005-11-10 15:36, By: Gfw, IP: [172.16.1.73]

L2: Reasonable interest rate
The IRS publishes these rates, breaking them down differently according to the distribution frequency (annually, semi-annually, quarterly or monthly).
I always use the IRS website and published percentages.
Check out this IRS link…
http://www.irs.gov/taxpros/lists/0,,id=98042,00.html
For example, here are the numbers I use for November:
Mid-term
Annual Semi-Annual Quarterly Monthly
120% AFR 5.09% 5.03% 5.00% 4.98%
As you can see…IRS has already calculated the “delta”.
MG / BamaAdvisor2005-11-10 15:55, By: BamaAdvisor, IP: [216.248.170.201]

L2: Reasonable interest rateI get one of the first notifications when rates are published. However, because they publish the current month, doesn”t mean that it can be used and according to Rev.Rul. 2002-62, it can not be used.

Revenue Ruling 2002-62 and Qualified SEPP Plans post 12/31/2002: The interest rate that may be used is any interest rate that is not more than 120 percent of the federal mid-term rate for either of the two months immediately preceding the month in which the distribution begins.2005-11-10 16:00, By: Gfw, IP: [172.16.1.73]