72t – interest rates

L1: 72t – interest ratesI have a question regarding the interest rates to be used for calculating 72tdistributions and I’m getting different answers from different people/organizaations inlcuding my tax accountant- hope you can clarify. If I read your website correctly I CANNOT use an interest rate higher thatn 120% of the IRS determined midterm rates (past two months before initiating). I’ve been told that I must only meet the minimum distribution and could go higher at my determination.2006-01-03 20:34, By: FAR, IP: [207.224.22.31]
L2: 72t – interest ratesHello FAR:
When designing a SEPP plan, the highest interest rate that may be used when implementing the annuitization or amortization methods is 120% of the MT/AFR for either of the two months preceeding the month of the 1st distribution.
Any interest rate less than the above is equally acceptable.
Now, if you use the amortization method with a zero interest rate, you get the same answer as the minimum distribution method. Therefore, by inference, for any given account balance and age, the annual distribution can be any number between the minimum method up to a maximum as computed by using an interest rate assumption as discussed above.
TheBadger
wjstecker@wispertel.net
2006-01-03 21:07, By: TheBadger, IP: [66.250.23.25]

L2: 72t – interest ratesGood morning FAR:
From your last sentence in the original post:
I’ve been told that I must only meet the minimum distribution and could go higher at my determination.
it sounds like your other advisors and tax accountant don’t understand the workings of 72(t) / SEPP Plans and are covering their rear ends rather than learning the subject so they can give correct advise.
Apparently there are few really qualified tax advisors for 72(t) questions in the country. TheBadger is one of the qualified tax advisors / CPA’s. Also, when the IRS refers people to this site with their 72(t) questions, that speaks highly for this site.
Jim2006-01-04 08:53, By: Jim, IP: [70.184.1.35]