72 T Rule

You are here:
< Back

L1: 72 T RuleWhich method should I use to set up my 72T distributions? I”m 55 with 800k in my IRA.2008-03-03 04:43, By: JS, IP: []
L2: 72 T RuleJS,
I think you should start with the question of how much you need each year (gross amount that you will pay taxes on after withdrawing) to live on. Let”s say that number is $30,000. Then go to the reverse calculator on this site, and see what starting balance can support it. Keep in mind that the age to use is what you will attain in the year your start the 72t. Remember if you wait a while before doing your first payment, the interest rate component may have to change and a new calculation done, as you can only use the max interest rate in the tablefrom either 1 or 2 months prior to the month of first payment date. I think the reverse calculator shows all three methods, but thehighest yield is Amortization, so use the figure from that method, (and also choose single life method) and see if it leaves you with other IRA money that your can keep in a separate IRA. Once you determine the amount needed to fund the plan, if there is money left, do a direct transfer to a new IRA of the money amount needed, and start the 72t from the new IRA. If any time has passed, recehck your calculations using regular calculator before starting the 72t, to take into account the rate that can be used. It may change your yield a bit. The allowable “max interest” rates (for the calcs) are dropping each month, so check the table on this site to see which max rate you would like to use, and figure out when that first payment has to be made to you in order for that rate to be valid, and advise your custodian of that deadline. KEN2008-03-03 06:38, By: Ken, IP: []

L2: 72 T RuleThanks, Ken. Just got back from Fidelity and set it up exactly as you suggested.2008-03-03 08:05, By: JS, IP: []