determining SEPP payment
L1: determining SEPP paymentSirs: I’ve been told by one investment company that the SEPP (once calculated) using one of the three methods, can be a fixed monthly figure between the lowest calculation (RMD) and the highest calculation (Amortization). In other words, it doesn’t have to meet the exact calculation of one specific method…is this true?Example: RMD is calculated at $600/month, and Amortization is $2200/month. So, if a fixed amount is needed for income purposes of $2000 a month…then this would be an acceptable amount to base the full SEPP payment timeframe on?Thanks2008-11-09 13:34, By: action, IP: [18.104.22.168]
L2: determining sepp paymentyou could end up with the results in your example, but not for the reason that you are using. you can use any of the 3 formulas, but once selected, you have to choose the exact annual payment based on 1 of the 3 options. you cannot, merely pick a number someplace in between the high and low.
what you can do is experiment with the reverse calculator [link in left menu] and find the amount that would be required to produce your desired income level. once you have determined the amount, separate the balance into a new ira account with a new account number and use it for emergencies or unexpected events – it would not be part of the sepp. you could also accomplish the same by reducing the interest rate used in the calculations below the maximum allowed, but the first option has more benefits.
possibly you misunderstood what your advisor said. if not, you may want to find a new advisor that gives competent advice or at least states that he/she doesn’t know, but will find the answer.
2008-11-09 15:57, By: gfw, IP: [127.0.0.1]