401K

L1: 401KWas planning on retiring this fall until I found out about the rule change for early returns prior to being 59 1/2. I found a ruling that grandfathers a SEPP if started prior to JAn. 2003 but none for a 401K. The old ruling tied the return to the long term bond rate but the new ruling ties it to the mid term bond rate. Does anyone know of such a rule??? If so where can it be foound in writing.
Thanks2004-04-26 12:55, By: steve-o, IP: [162.18.17.229]

L2: 401KThe ruling you are seeking doesn”t exist – please review my reply to your previous post.
NewSEPP plans – of any type – are subject to the new rules.
Previous Post…
By: Gfw Date: 4/26/2004 Subject: 401K
Lets start with…
Any SEPP plan initiated after 12/31/2002 is subject to the new rules. This applies to all qualified money including 401(k)s, IRAs, etc. The only plans that were grandfathered were SEPP plans that commenced distributions prior to 2003. The interest rate is not tied to the short term bond rate. The maximum rate is 120% if the mid-term Applicable Federal [AFR]rate as published by the IRS for either of the two months immediately preceeding the month the first distribution is made. This rate is somewhat consistent with but not the same as the 5-year treasury. The maximum interest rate for pre-2003 plans was generally considered to be 120% of the long-term AFR – again a rate published by the IRS.Hope this helps 2004-04-26 13:01, By: Gfw, IP: [172.16.1.71]

L2: 401KHello Steve-o:
Old plans (defined as commencing before 1/1/03) had considerable latitiude regarding interest rate and mortality table assumptions. Generally speaking; these plans most often used 120% of the long-term applicable federal rate.
New plans (defined as commencing on or after 1/1/03) must use an interest rate no higher than 120% of the mid-term applicable federal rate that was inforce for either of the two months preceeding the month of the first distribution.
All of this can be found in Revenue Ruling 2002-62. Further, for purposes of applying RR 2002-62 to IRC 72(t)(2)(A)(iv) issues, IRAs and 401(k) acounts are considered to be the same.
TheBadger
wjstecker@wispertel.net
2004-04-26 13:02, By: TheBadger, IP: [66.250.23.21]