L1: Interest RatesThe rules say the selected interest rate for an SEPP must be no higher than 120% of the prior two months Mid Term Rates. I notice when using the calculator on this site one is limited to a 2 decimal place interest rate (ie 3.23%). Is it acceptable to use an interest rate with six or eight or more decimal places, ie 3.2295547356%?I have set up an account and don’t want to have to put a precise balance into the account so that the exact annual withdrawal amount that I want exactly calculates based on the 120% Mid Term Rate but rather to calculate an exact interest rate (that falls below the 120% mid term rate) that delivers exactly the annual withdrawal that I require.2010-06-04 17:19, By: ralph, IP: [188.8.131.52]
L2: Interest RatesAs long as it it below the maximum, use as many decimals as you want.However, a better approach might be to use the maximum rate allowable and the Reverse Calculator to determine the amount required to fund your annual distribution. If it doesn’t require the total amount, move the excess into a separate IRA (with a separate account number) for emergencies or if needed an additional new SEPP in the future.If it were my plan, using a lower interest rate would be at the bottom of my list of choices.2010-06-04 17:35, By: Gfw, IP: [184.108.40.206]
L3: Interest RatesI am interested in your response. It seems like it is going to be a hassle getting the exact amount in my account as of 6/30/2010 not knowing how the market will perform and what the exact amount will be in the account until after that date. I am planning a withdrawal on 7/15/10. I also don’t like the thought of making a withdrawal that isn’t an easily remembered round number.Seems like the easiest thing to do is make sure I have enough in the account for market fluxuations and so asto ensure the calculated interest rate is going to be below the prior 2 months. That way I don’t have to know the exact amount in the account until after the fact. What am I missing?2010-06-04 17:46, By: ralph, IP: [220.127.116.11]
L4: Interest RatesI really don’t see a problem. If your first distribution occurs on 07/15 then the max rate would be 3.45% – higher of May & June.
If I am age 50, have a total of $500,000 and want $20,000/Year, I go to the reverse calculator and enter age 50, 500000 and 20000 – using the amortization method, I need to leave $397,979.60 in the SEPP and transfer the balance (about 102,019.40) into a separate IRA. While I have from now until 07/14 to accomplish the transfer, it shouldn’t really take more than a few days. 2010-06-04 18:23, By: Gfw, IP: [18.104.22.168]