ANNUAL RECALCULATION

L1: ANNUAL RECALCULATION
I”ve read all the PLR”s related to annual recalculation and now understand that the IRS accepts that method not only for the Min. Dist. method, but actually for all three. In some of the PLR”s they cite the method of using the new account balance, the new actuarial age, and 120% of the Mid-term rate prior to the commencement of payments. In other PLR”s they say the same thing with regard to the account balance, the age and then say 120% of the Mid-term rateFOR THE MONTH PRIOR TO THE NEW YEAR. In my case, I want to take an amount much less than the 120% rate, say 2.5% or 43% of the mid-term rate. When I recalculate for the second year, do I have to stay with the 2.5% or 43% of the original Mid-term rate or should I use 43% of the NEW mid-term rate (prior month of new year) or can I choose another rate as long as it is still less than 120% of the NEW/OLD mid-term rate?2007-01-03 17:36, By: Rich, IP: [216.205.217.129]

L2: ANNUAL RECALCULATIONHello Rich:
I would suggest two solutions:
1. Reduce the size of the IRA in question by splitting it such that the resultant balance requires 120% of the mid-term applicable federal rate.
2. Express the interest rate youuse a relative rate to the mid-termAFR such as43%. In this manner all three variablesare updated at each recalculation date.
TheBadger
wjstecker@wispertel.net2007-01-03 17:49, By: TheBadger, IP: [72.42.67.112]