Low Treasury Rates
L1: Low Treasury Rates
In case you missed it, yesterday (09/09/2011) the 10 year Treasury not only hit it’s low this year, it also hit the
all time low at 1.93%.
The same day, the 2/3/5/7 & 20 year rates also hit all time lows.
You can find the last 30 days Treasury rates athttp://72t.net/72t/InterestRates/Treasury/Trends
2011-09-10 20:06, By: Gfw, IP: [188.8.131.52]
L2: Low Treasury Rates
The lower the rates go, the closer the MD calculation gets to the fixed dollar methods. If the rate drops to 1%, the MD calculation will be about 85.5% of amortization, so MD will always generate less, just not the usual 60%
or so of fixed dollar calculations that occurs when interest rates are in a normal range.
These low rates may cause people to consider recalculated plans in the hope that account balances will recover and interest rates will rise along with the older age. But the risk of error is considerably higher with these plans
and the IRS has seen very few of these in the past. While the IRS has issued numerous PLRs approving recalculation, thereis concernthat many agents will not understand how and why the annual amount changes every year.
2011-09-10 23:10, By: Alan S., IP: [184.108.40.206]
L2: Low Treasury Rates
09/22/2011 – another record for the 10-year treasury…
10 Year – Current Year Low 9/22/2011 1.720%
10 Year – Current Year High 2/8/2011 3.750%
10 Year – All Time Low 9/22/2011 1.720%
10 Year – All Time High 9/30/1981 15.840%
2011-09-23 14:35, By: Gfw, IP: [220.127.116.11]
L3: Low Treasury Rates
Statement from Ben Bernanke:
“Come on baby let’s do the twist..Come on baby let’s do the twist”
All joking aside… How much of an effect on the mid term rate will the Fed’s selling short term bonds and buying long term bonds have?
2011-09-23 19:31, By: Bob_85364, IP: [18.104.22.168]
L4: Low Treasury Rates
The 120% Mid-Term [SEPP] Rate is based on the 3, 5, 7 and 10 year treasuries. To the extent that it pushes the 10 year rate lower (and the 3, 5 & 7 year rates don’t rise) the SEPP rate will trend lower.
However, most of what I have read indicates that “operation twist” was already anticipated and built into the markets before the fed announced. Net result, it will probably have little impact on pushing rates much lower. It very well might keep the rates
from rising for a period of time.
Just my thoughts… Since interest rates can’t go much lower, if I were starting a SEPP today, I would definitely use annual re-calculation. At least I wouldn’t be locked into today’s rates for the next 5 to 10 years. Yes, annual re-calculation means
that I take more risk, but properly structured the additional risk is minimal.
2011-09-24 16:21, By: Gfw, IP: [22.214.171.124]