How Can We Help?
< Back
You are here:
Print

72T Interest Rate

Posted
Last Updated On
Bytbone

L1: 72T Interest RateI recently recieved a 72T distribution estimate form my broker at Morgan Stanley. I was shocked to see how little I could get out of my IRA via 72T so I called my broker and asked about it. She basically said that the group at Morgan that quotes this stuff said that”s all I could get. I looking at the quote they used and interest rat of 1.00 %. I thought the interest rate was 120% of the current mid term rate. What is the interest rate used in making this calculation? Is Morgan all wet?2006-10-14 22:34, By: tbone, IP: [64.252.130.106]
L2: 72T Interest Rate1% is ok since it would be lower than the maximum, but it isn”t anyplace close to the maximum.
The maximum interestrate 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.
You can find a table of rates at http://72t.net/InterestRates/RatesFor72t.aspx
2006-10-15 04:59, By: Gfw, IP: [172.16.1.71]

L2: 72T Interest Ratetbone,
It sounds like you may already know more about 72(t) rules than they do at your local officeof Morgan Stanley, especially if they told you that (1% rate) is “all you can get”. I”d find a new advisor, since the 120% mid term (max) rates have been in the high5% to low 6% range over the past six months. Why don”t you do your own estimate using the tools on this site, and show it to them. Then tell them you are thinking of doing atrustee to trustee transfer to someone who knows what they are doing unless they find someone who really understands 72(t) calculations. I recalculated my plan (that I started in March 2006 at age 56) using that same 1% rate, (and my same amortization choice)and it yielded 40% less per year than my plan, whichused the JAN”06 max rate of 5.39% for my calcs. I can see how that rate could hurt. Let us know how you make out. KEN2006-10-15 15:48, By: Ken, IP: [141.149.182.81]

L2: 72T Interest RateNow, I know this sounds cynical, but if there are any other IRA funds available, usinga 1%rate would be a great way torequire thatthose other IRA funds be transferred into the MS account in order to generate the needed distributions. Thus, the question……..are there other IRA accounts available that they know about?
The larger the SEPP universe, the less potential for other IRA fundskept outside the planfor emergencies, a second SEPP plan etc.2006-10-15 17:57, By: Alan S., IP: [24.116.66.98]

Table of Contents