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Amortization calc in 72t

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ByGMAN

L1: Amortization calc in 72tUnder 72t calcs using amortization method, the IRS example and your calculations appear to use an “end of period” amortization formula.
The problem is that clients wanting to do a 72t plan want to start their SEPP payments right away so why don’t you use the “beginning of period” amortization formula… they are taking the first payment now… not 1 year from now.2009-08-18 21:16, By: Gman, IP: [68.219.70.231]

L2: Amortization calc in 72tAsk the IRS. That’s the way they did the calculations in Rev. Rul. 2002-62. In IRS Notice 89-25 they used a begining of year calculation.
Our objective to to match as closely as possible (and we do) the IRS calculations.
Net result is a higher annual distribution and a distribution amount that always exceeds the amount calculated using the annuity method.

2009-08-18 21:39, By: Gfw, IP: [216.80.125.206]

L3: Amortization calc in 72tSince you have dealt with this area for a long time, is there a certain person or area at the IRS that specializes in questions like that?2009-08-19 00:31, By: Gman, IP: [68.219.70.231]

L4: Amortization calc in 72tSome possible logic for end of year component, albeit just a guess:
1) Consistent with the required age which is age at year end
2) Total distribution is not due until year end as these are calendar year plans
3) Perhaps the IRS just wanted to provide a break by deciding to use the later date which produces a larger distribution per dollar of account balance.2009-08-19 00:46, By: Alan S., IP: [24.116.165.60]

L4: Amortization calc in 72tWhy does it make a difference? Best bet is to accept it for what it is. Real question… What will it gain you to get an answer?
If you really need to know, find the person (people) that wrote Rev. Rul. 2002-62 and did the examples.
2009-08-19 01:06, By: Gfw, IP: [216.80.125.206]

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