Actual Investment Rates

L1: Actual Investment RatesThankyou for the response to my 10/25 posting. Unfortunately, I meant to inquire as to the non effect of different “actual investment rates” on the distribution amount. After reading the help section I appreciate the actual rate doesnot alter the latter.
I am, however, confused on several new issues. The involved funds are a combination of contributory and rollover IRAs. In ’03, my initial year, I utilized identical amounts for the IRA balance and “amount allocated to SEPP plan” calculation components. Was this a correct assumption?
Moreover, I further presumed the subsequent distribtuions required annual recompilation utilizing updated account holder age (currently 55), IRA balance, reasonable interest rate, and actual investment rate. In ’03 I computed and received my distribtion in Dec. utilizing 12/31/02 IRA balances and annuitization method. In ’04 and subsequent years I intended to be consistent by computing via annuitization and receiving the distriution in Dec. based on my 12/31/03 balance.
My confusion is the provided computaion table requests “age of account holder in year distribtuion will begin.” This would seem to imply the age and possible other componets would be constant for the annual distribtuions. The 5/12/04 Will Stecker article, however, would appear to support annual recompilations wilth new data.
Thanks again for your insight.
Bob Y.2004-10-28 15:28, By: Bob Y., IP: [66.81.0.10]

L2: Actual Investment RatesLets start with the simple part first. If you planned to use your entire account balance to fund the SEPP, then your entries were right. The key entry is the one that is labeled as Amount Allocated to SEPP Plan۝. SEPPs that were established based on Rev. Rul. 2002-62 were most all established without recalculation based on the literal interpretation of the ruling.
However, there were a few people that didn’t like the strict interpretation and they filed for a Private Letter Ruling asking for the ability to use annual recalculation. There have been a few PLRs that have subsequently also approved the method. However, in each case the method was outlined and adopted as part of the plan when the plan was adopted, not after the fact.
You mention your confusion with age of account holder in year distribution will begin۝. We use that simply because it’s about as close as we came to the definitions used in 2002-62 and until the PLRs approving re-calculation were issued, it was the only way that age was defined.
Questions to consider_ Was your plan reduced to writing prior to its implementation and did the plan contain a provision for annual recalculation? Was your plan implemented prior to the date when the PLRs were issued? Were you working with any accountant, attorney or investment firm that can help verify the facts? You may want to discuss these questions with your tax advisor before you decide to add recalculation to your plan.
Just my thoughts. The Badger may also offer a few comments or suggestions.
2004-10-29 09:51, By: Gfw, IP: [172.16.7.101]

L2: Actual Investment RatesHello Bob:
I have read your post a couple of times & confess that I am still confused as to what the real questrion is. That being said:
1. Annual recacluation is now okay.
2. If you use annual recalc you must recalulate all three variables: account balance, interest rate & life expectancy as of the same day every tear going forward.
TheBadger
wjstecker@wispertel.net
2004-10-29 10:00, By: TheBadger, IP: [66.250.23.22]

L2: Actual Investment RatesHi Bob:
GFW & TheBadger can best explain the nuts & bolts of the calculations, but I would like to try clearing up … assuming you still have some confusion on the point … the translation of age of account holder in year distribution will begin۝.
This would be the same as “attained age” which simply means “how old are you going to be on December 31st of any particular year?” This usually comes into play for Required Beginning Date associated with Required Minimum Distributions and age 70 1/2. When you look for your age at the end of the year it seems to clear up a lot of confusion about age and IRA distribution questions.
Jim2004-10-29 11:32, By: Jim, IP: [68.1.157.228]