Interest Rates

L1: Interest RatesThis is my first post, so I will appologize in advance if i’m wasting your time.
Am I misunderstanding the whole thing.
The mid-term interest rate I keep reading about is used to calculate the
pay-out .
But is it independant of the interest rate that my investment vehicle that
is funding the 72T earns?2004-11-23 00:07, By: JimM, IP: [67.115.111.195]

L2: Interest RatesHello Jim:
The 120% of mid-term applicable federal rate is an interest rate assumption usied in the amortization and annuitization formulas ONLY. It is unrelated to how your portfolio might perform.
TheBadger
wjstecker@wispertel.net
2004-11-23 09:06, By: TheBadger, IP: [66.250.23.23]

L2: Interest RatesGood morning JimM:
Here’s another way to view the Applicable Federal Rate (AFR) upon which you base your distribution. The AFR is published each month by The Government, so it’s really the figment of somebody’s imagination with a little logic thrown in. This rate is totally independent of the real interest or return of your actual investment.
When you calculate “120% of the AFR” for your distribution, that is the upper limit. You may choose to use some figure smaller than this for your calculations.
When you set up your plan, include a separate IRA or other type plan that’s outside of your SEPP to use for emergencies. If you find a need for funds in a few years then you can tap this second fund and not worry about busting the SEPP.
Good luck.
Jim2004-11-23 09:24, By: Jim, IP: [68.1.157.228]