L1: interest ratesAre there any advantages/disadvantages to wait until the 72t interest rate used goes higher before starting a withdrawal plan?2008-04-04 12:55, By: waiting, IP: [220.127.116.11]
L2: interest ratesThe answer to this question is another question:
When will interest rates go back up to the level you wish to use? Of course the answer is you don”t know.
Unfortunately you are stuck with the interest rate from either of the two preceeding months when you choose to take your first distribution. Generally the decision about when to start is governed by whenyour financial needs have to bemet which determines whenyou have to start taking distributions.
Jim2008-04-04 14:04, By: Jim, IP: [18.104.22.168]
L2: interest ratesThere is the possibility of a higher payment via a higher interest rate in your calculated SEPP payment. Of course, rates could always decline too, so no one really knows for sure. What we do know is that the Fed tends to raise or lower rates over a period of some months.They have demonstrated this behavior multiple times over the past several years.They recently started cutting rates significantly, so it does not seem too likely to me that they will start raising them any time soon. It seems more likely to me that they will do a few more rate cuts and then hold the rate steady for some months while they review the effects on the economy of the rate changes they”ve already made. Although no one has an interest rate crystal ball, itseems unlikely to me that we would get a significant (read 1% or more) interest rate increase from the Fed prior to mid-2009 or so.
Perhaps a bigger question for potential SEPP plan owners is “When do you need the money?”. If you can wait for a year or two, you may well see higher interest rates. If not, then it is pretty much a non-issue.
Another question would be “How much money do you need to distribute in retirement?”. If higher rates are unlikely to occur anytime soon, you can still generate a higher payment via having a larger IRA balance. Another few years worth of savings might be needed to meet your retirement goals.
2008-04-04 14:04, By: Ed_B, IP: [22.214.171.124]