mid term rate and payment dates
L1: mid term rate and payment datesI have a couple questions
1) Is there an exact payment date each year for the SEPP? Or is it up to me.Can Itake my payment out on Dec 31, or Jan 1. In other words, can the distribution date be different year to year. The reason being, if the money is kept in the IRA until years end, more interest/gains can be made. Or maybe one year, it makes sense to get the distribution sooner.
2) Also, I probably know this answer, but want to ask anyway. With the midterm rates being so low….lowest in decades, it seems unfair that one has to establish such a low rate for so long. I am 50 yrs old, and I understand I can redo it when I am 59 1/2 yrs old, but still, it seems unfair that one has to setup a payout at ~2.5% for so long. Is there any accomodation for a rising midterm rate in the future, or is one really stuck at these low rates?
2009-04-01 16:28, By: dave, IP: [18.104.22.168]
L2: mid term rate and payment datesHello Dave:
Any day in the year is a great day for a distribution. Furthermore, distribution date(s) can change year-to-year.
Regarding the low interest rates; you have two choices: (a) adopt a fixed plan which means calculate once and distribute the same amount for all plan years, essentially staying stuck with the low interest rate for the plan duration; oe (2) adopt an annually recalculated plan meaning a re-calculation of all three variables is done every year (usually at year’s end) to arrive at a new annual distribution for the year. These annually recalculated plans require recalculation every year and must recalculate using updatged values for balances, interest rate and life expectancy; therefore an annually recalculated plan may be a two-edged sword — it may cause the annual distribution to rise caused by increasing interest rates and it may cause the annual distribution to go down caused by decreasing balances.
2009-04-01 20:34, By: TheBadger, IP: [22.214.171.124]
L3: mid term rate and payment datesWith respect to the actual distribution dates, while you can take out the exact required amount anytime you wish during the year, it would be risky to mess with your final distribution date being any later than Dec 15th. If something gets messed up it, you can be left with the Holidays and year end chaos to deal with any corrective measures that may be necessary. Hopefully, you were just using 12/31 as a hypothetical example.2009-04-02 04:48, By: Alan S., IP: [126.96.36.199]