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Lower than 120% Interest Rate usage

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Last Updated On
ByYYL

L1: Lower than 120% Interest Rate usageI was wondering if anyone could help me out with this problem.
My financial advisor started taking out funds at a fixed rate per month. He didn’t calculate any of the three ways, he just set it up as a premature distribution and is taking out a fixed monthly amount.
I think the total yearly distributed amount is smaller than both the 120% based ammoritized and annutized amounts.
Is this OK? Can I just assume that it is using a smaller interest rate (that I don;t know what it is) and that’s how I’m getting the amount I am actually distributing, so long as I take out the exact same amount next year?
Or do I need to know the interest rate for some reason?
Thanks for any help on this matter.2004-05-28 08:54, By: YYL, IP: [62.0.89.106]

L2: Lower than 120% Interest Rate usageNo. The distribution must be calculated in accordance with one of the three acceptable methods. You may want to consult with your legal/tax advisor as to the proper solution, but the way it stands (unless you can prove the amount distributed complies) you have a tax/penalty problem. In an audit (if there ever is one) you’ll probably have to demonstrate the assumptions used.2004-05-28 09:10, By: Gfw, IP: [172.16.7.101]

L2: Lower than 120% Interest Rate usageIn my opinion, you need to find out exactly how the FA calculated the distributions.
Actually, that information should have already been provided to you.
2004-05-28 16:56, By: Gary T, IP: [24.145.242.199]

L2: Lower than 120% Interest Rate usageI asked my financial advisor how he calculated it…his answer: he didn’t. He just started taking out regular monthly withdrawls that are set up as premature distributions.
So what I am trying to figure out is, is any number lower than the 120% amount valid? i.e. is the 120% a maximum, and anything under it is OK? or does it need to be exactly 120%…b/c the amount that has been taken outis between the minumum distribution method and the heigher ones.
THanks for any help.2004-05-30 07:36, By: YYL, IP: [62.219.165.44]

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