L1: August AFRAugust, 2010… 120% Mid-Term = 2.62%, Applicable Federal Rates for 72(t) and 72(q) distributions. Click HERE2010-07-20 11:51, By: Gfw, IP: [18.104.22.168]
L2: August AFRIt is interesting to note that we now have 3 straight months of declines in interest rates and also in the equity markets. For those who are pondering starting a SEPP plan, now might be an opportune time to act:1) August is the last month for awhile where a rate over 3% may be applied, ie the June rate.2) Use of a 4/30 account balance should be no problem if the markets do not drop sharply from now to the first distribution. The S&P is down about 10% from 4/30, and that is well within the range of being a representative value of the IRA.3) The combination of the above produces a slightly higher account balance to use in the calculation AND a higher interest rate than the present rates. We may not have a more favorable combination than this for the rest of 2010.4) It may or may not be too late for a July (9 business days) start, but there is plenty of time to start now for an August distribution and to have addressed and double checked all the appropriate issues.5) An August start date allows the choice to take either 5 months of distributions this year or take the full 12 months.The above suggestion is more applicable to those who will need the maximum distribution from their available IRA accounts, but these people will also NOT have other retirement accounts outside their SEPP in most cases for emergency needs. That means that they will be under pressure to keep their expenses in line with their annual distribution amount or they may be forced to bust the plan.2010-07-20 18:52, By: Alan S., IP: [22.214.171.124]
L3: August AFRSomething else to think about. With interestrates at their current levels, now might be a great time to look into aSEPP usingannual recalculation.2010-07-20 18:55, By: Gfw, IP: [126.96.36.199]
L4: August AFRBen Bernanke and Co. are keeping the federal funds rate between zero and 0.25%, and still expect to keep it that way for an extended period.2010-08-10 22:40, By: Bob85364, IP: [188.8.131.52]
L5: August AFRMore than just the fed funds rate, the Fed will be purchasing more mortgage and longer term Treasury debt, and that could depress the 120 mid term rate even more than further fed funds reductions assuming that they had any room for such reductions, and they don’t. Bottom line, today’s announcement would appear to further depress near term interest rates for 72t plans.
It suggests more incentives to move NOW for an August inception for a 72t plan if you can’t afford a reduction in rates in the coming months. But you should never rush andcompromise onyour analysis of your need for a 72t plan, the distributions needed and the calculations.
2010-08-10 23:00, By: Alan S., IP: [184.108.40.206]
L6: August AFROur estimate of the September rate is already about 12 basis points lower than the August rate…
http://72t.net/72t/InterestRates/Estimated/AFR/Mid-Term2010-08-10 23:34, By: Gfw, IP: [220.127.116.11]