ANY rate below the 120% of mid-term fed

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L1: ANY rate below the 120% of mid-term fedIn Feb 2008 started SEPP on IRA. Value was at $617800, age 53. At that time the max rate was 4.97%. That would have given a monthly rate around $3250. I rounded down to $3000 which would have been a rate lower then the feds max, about 4.25%. The IRA administrator gave me a 1099-R coded 2(SEPP) for ’08 but for ’09 it showed code 1 due to the fact I didn’t take out the $39,000(max amount at 4.97). I said it could be a rate lower, but they say I needed to show the 4.25% rate not the max rate that 72t on the net defaulted to for a Feb ’08 distribution rate of 4.97%. Since I was able to take out as much as $39000, I requested a lesser amount of $36,000 a year, no changes since it was started. Shouldn’t they issue the 1099 as SEPP since it was less then the max I could have withdrawn???!!!2010-03-03 01:07, By: Charlie, IP: []
L2: ANY rate below the 120% of mid-term fed
Short answer… no. If the annual distribution is calculated as ‘X’ then you must take ‘X’, not ‘X’-1 or ‘X’+1.
Sorry, but you can’t just round $39,000 down to $36,000
Answer could be… yes. If you have documentation that shows that, based on the assumptions used, the resulting annual distribution should have been $36,000
2010-03-03 01:23, By: Gfw, IP: []

L3: ANY rate below the 120% of mid-term fedI think he is asking the following :He wanted an annual distribution of $ 36,000 ( $3,000/month). So he used 4.25%, which is lower than the 120% of federal rate. He wants to know if that is ok. I cannot see any reason it is not ok, so long as he can document the balance and interest rate used from the beginning, and the rate is ok.2010-03-03 01:37, By: dlzallestaxes, IP: []

L3: ANY rate below the 120% of mid-term fedI was able to go into the site and run the calculator showing a rate of 4.25 andthe amount in the SEPP Plan at 617800. This gives exactly the 36,000 annual amount. I’ll fax these calculations to the administrator and see if they’ll re-issue a corrected 1099-R. If they don’t can I do a 5329 to show my intentions. I did use a lesser rate but just didn’t show it.2010-03-03 01:47, By: Charlie, IP: []

L4: ANY rate below the 120% of mid-term fedYes, go ahead and use a 5329 and show exception code “02” applying on line 2. Your plan is between you and the IRS, the IRA custodian just lends an optional amount of support to your plan, and their exception coding is not required. In fact, most custodians will not provide the exception code no matter what you do. 2010-03-03 03:03, By: Alan S., IP: []