L1: Calculation ResultHi Guys,
Planning to start a 72t distribution on the 15th of this month (June). My birthdate is 12/15/61. The IRA that I’m using has a balance of $566,776.38. I submitted the distribution form to my brokerageselecting 2.55% as the 120% of the mid term ratenumber and selected the Amortization method with a single life expectancy. They have indicated that the annualdistribution will be $28,567.12. When I input the same information in your calculator I get a result of $28,088.34. I’m very concerned that we get the right number. I have rechecked all of the numbers/specs with my brokerage firm and they insist that their calculation is correct. I have a call in to my CPA but he hasn’t returned my call yet. Thought I would check with you in the mean time. Any idea why their calculation would be that far off?2017-06-07 20:19, By: Marconi, IP: [126.96.36.199]
L2: Calculation ResultI’m sure that you realize that you are choosing to lock yourself into this plan until 6/15/2022, instead of finding a different way to get you to 6/15/2021 when you will be 59 1/2, when you will have complete flexibility.2017-06-07 20:25, By: dlzallestaxes, IP: [188.8.131.52]
L3: Calculation ResultYes I have factored that in.
2017-06-07 20:39, By: Marconi, IP: [184.108.40.206]
L4: Calculation ResultDid the other calculator ask you about pro rating the first year distribution?2017-06-07 23:44, By: Alan S, IP: [220.127.116.11]
L5: Calculation ResultNo. Basically I submitted a form outlining the specs for my 72t plan. Age/birthdate, preferred method of distribution (amortization), single life expectancy etc…etc.. They then provided me with an annualized number as outlined in my original message.2017-06-12 16:21, By: Marconi, IP: [18.104.22.168]
L3: Calculation ResultHello,
What is the actualcalculation formula for the Amortization method? The calculation that your SEPP calculator uses?
Thank you so much.
Mike2017-06-15 13:20, By: mtrcylmike, IP: [22.214.171.124]
L4: Calculation ResultApparently the same formula that is used by the IRS.
It is a standard formula – you can also find it in Excel.2017-06-15 13:24, By: Gfw, IP: [126.96.36.199]
L2: Calculation ResultI don’t comment on other calculators as I really don’t know how they were setup.
However, I will say that we set up our calculators to match the calculations that were included in the IRS publication “Retirement Plans FAQs regarding Substantially Equal Periodic Payments” and the results still equal the results in the published examples.2017-06-08 09:11, By: Gfw, IP: [188.8.131.52]
L3: Calculation ResultGfw, the second last question in the IRS link you posted makes a statement that if taxpayer will be taking monthly distributions, this should be reflected in the calculation. Do not recall reading this before in any IRS guidance??2017-06-12 20:27, By: Alan S, IP: [184.108.40.206]
L4: Calculation ResultAlan… Neither do I. The previous rulings that havedealt with monthly distributions merely divided the annual by 12. If the calculation uses the monthly rate to calculate the monthly distribution, they would be locked into all future distributions being monthly.
Using the annual amount allows the person a lot more flexibility – any distribution any time as long as the calculated amount – no more and no less – is distributed during the year.2017-06-12 20:40, By: Gfw, IP: [220.127.116.11]
L5: Calculation ResultPart 2… monthly from our FAQ…
Can distributions be made monthly? A. While payments must be made at least annually, several letter rulings address the subject of monthly payments.
PLR 8919072 – The annual distribution amount was distributed as 12 equal monthly payments.
PLR 9050030 – The distributions were calculated as monthly distributions using a monthly compounding rate. In this ruling the remaining life expectancy was was converted to months by converting the fractional life expectancy to the nearest whole month.
PLR 200105066 – The annual distribution was divided by 12 with the first payment to be made in July – only six payments were made in year 1 with the second annual payment calculated in January of the following year.
In PLR 9050030 not only was the interest rate adjusted, but they also adjusted the life expectancy. I think I will stick with annual calculations.2017-06-12 20:50, By: Gfw, IP: [18.104.22.168]