Return Assumptions When Calculating 72T

L1: Return Assumptions When Calculating 72T
The firm I work with provides a “pre-59 1/2 Dist.” calculator. I am assuming they are using end of year return assumptions when computing the annuity factor. This calculates to a 4.8% higher “allowable” 72t than the calculator on this site. Is this allowed?
Taking a 55 year old – $1,000,000 – 4.00% interest rate assumption (it doesn’t allow you to go below that). It shows the same L.E., and a 16.4396 factor used in annuity factor method. 2003-07-02 09:21, By: Frustrated, IP: [127.0.0.1]

L2: Return Assumptions When Calculating 72TFrom you description, it sounds like the calculator may not be accurate. The IRS has pblished an FAQ at http://www.irs.gov/retirement/article/0,,id=103045,00.htmlwhich contains some sample calculations – see if the calculator can re-produce the IRS examples. 2003-07-02 09:44, By: Gfw, IP: [127.0.0.1]

L2: Return Assumptions When Calculating 72TBTW – the maximum rate for a plan started in July is 3.82% – 4% would exceed the maximum – maybe you should find a new calculator or at least point out the problem to the Administrator of your plan.2003-07-02 14:38, By: Gfw, IP: [127.0.0.1]

L2: Return Assumptions When Calculating 72TThanks to both of you for your response. I wasn’t able to find a calculator in the IRS site. In respect to the 4.00 interest rate – I realize that it wrong – I was using that as an example – and in doing so, I believe the annuity factor is incorrect. I believe, based on the info I presented (age 55, $1mm, 4.00% int. rate assumption), that it should be 17.272 vs. 16.4396 taking the dollar amount from $60,828 to $57,898. From what I understand, I believe this company has made an “assumption” that the distribution would not come out until the end of the year and used a projected escalated value. I can’t think of any other reason. Also from what I understand, the company that provided this software to my company is very widely known/used – so – I don’t know if I’m totally out there or if I know more than they do (through this site of course :).2003-07-02 14:54, By: frustrated, IP: [127.0.0.1]

L2: Return Assumptions When Calculating 72TAll the IRS examples assume an immediate payment – I’ve seen some of the calculators that are out and many still make the wrong assumption that the firat payment won’t be made for a year on both the amortization and annuitization methods.
Just remember, when (and if) the time arrives that you have to justify the payment amount, the IRS will be using their assumptions and their calculators – it will be between you and the IRS!2003-07-02 15:16, By: Gfw, IP: [127.0.0.1]