L1: midterm rate
I am 53 and plan on retiring in late march 2012. Can I use the mid-term rate for march to apply to my 72t IRA. I am hoping it may be higher than what it has been.
Thank You in advance
2012-01-25 18:30, By: worried, IP: [18.104.22.168]
L2: midterm rate
You can use the March rate only if your first distribution is made in April or May.
Note that in your first year of a 72t plan you can take out either a pro rated amount by the month (eg April start you would take out 75% of the annual) OR you can withdraw the full annual amount. Since interest rates are not
likely to change much in either direction over the next few months, there really is no rush to start the plan unless you need immediate cash flow. In other words, if you started the plan in October, you could still take out the full annual amount for 2012.
In October, you could use the highest of the August or Sept rates.
Delaying the start of the plan also gives you some time to determine if you are really retiring for good.
2012-01-25 19:19, By: Alan S., IP: [22.214.171.124]
L3: midterm rate
Thank you so much for your clear answer and your intriguing suggestion on the start of the 72t account. I don’t need cash immediately but I will receive a lump sum from the company upon my retirement in march, won’t I be penalised if I don’t put it in a
72t ira right away? if not, how much time do I have from time of receipt and the time I start the 72t.
2012-01-26 21:38, By: worried, IP: [126.96.36.199]
L4: midterm rate
Yes, you would pay tax and penalty on any amount that you do not roll over to an IRA. Therefore, tapping these retirement funds now would be costly and ifyou do not have any other assets in taxable accounts now to provide living
expenses, you would probably need to complete the IRA rollover and then start the 72t fairly soon from the IRA. Try to be sure that the entire plan balance is rolled over before starting the plan. Sometimes there are dividend payments due you after the rollover
that follow the main rollover automatically into the IRA. You should not start the 72t plan until you are sure that all amounts due from the plan have been rolled over. Then you can determine your account balance for 72t calculation purposes and start your
2012-01-26 23:36, By: Alan S., IP: [188.8.131.52]