Cost of Living

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L1: Cost of LivingWhat is the current rule of COLA under 72t. Is it allowed or is it a grey area?
Thanks in advance!
2007-01-29 11:25, By: Emerald, IP: [72.82.241.115]

L2: Cost of LivingI just did a computerized search of the IRC Section 72 code and I can”t find any reference to the words “cost of living”. I don”t think a “cost of living” provision is a part of the 72(t).
My “cost of living” adjustment will occur next year when my SEPP expires and I”ll be able to draw the ~10% growth of my account rather than the 3.8% I was limited to when I started the SEPP.
Another possibility for an adjustment is if you initially setup up your SEPP to do annual recalculations you might be able to see some annual increase as a result of that opportunity (it could go down if the interest rates drop.)2007-01-29 12:37, By: John, IP: [71.208.232.16]

L2: Cost of LivingHello Emerald:
Prior to the issuance Rev. Rule 2002-62 there were a handful of PLRs issued on COLAs; both fixed COLAs; e.g. 3% per year as well as relative COLAs; CPI 2006 divided by CPI 2005 times last year”s distribution amount. With the advent of Rev. Rule 2002-62 and the predominance of the word “FIXED” throughout the ruling, most everyone though SEPP plans using COLAs were now dead. Said another way, none of us (including me) are willing to opinethat a SEPP with a COLA is okay and no one to date has stepped up to the plate and gotten an affirmative PLR on this subject since approx 1999/2000.
The above said, I think if some one were willing to spend the money ($12-$13,000) to file for a SEPP plan with a COLA I think they would be successful for two reasons: one, the IRS has approved them in the past; two, and more importantly, COLAs and COLA like devices were specifcially provided for in the house and senate committee minutes of TRA 1976 which enacted IRC 72(t)(2)(A)(iv) to begin with.
TheBadger
wjstecker@wispertel.net

2007-01-29 15:01, By: TheBadger, IP: [72.42.66.170]

L2: Cost of LivingThanks for the information…that is exactly what I needed to know.2007-01-29 15:17, By: Emeral, IP: [68.39.22.196]