PPA interest rates
L1: PPA interest rates
Early retirees do 72t to avoid 10% penalty for early withdrawal of lump sum distributions. With the new PPA interest rates taking effect starting in year 2012, is it still advisable to receive lump sum payments against annuities?
Does anybody know how to figure out these new PPA ratesthat will substantially reduce lump sum payments? With interest rates still down, does it really matter? Retire in 2011 using 80%PPA rate and 20% GATT rate orin 2012 using 100% PPA rate?My problem
is I do not knowhow to figure this out? Please help. Thank you.
2011-10-05 22:35, By: wyzzy, IP: [126.96.36.199]
L2: PPA interest rates
Why not have your Plan Administrator do teh calculations for you? They would be the best source of information.
2011-10-05 22:59, By: Gfw, IP: [188.8.131.52]
L3: PPA interest rates
The original intent of the PPA phasein was to increase interest rates used for the lump sum calculation and thereby lower the lump sum. My guess is that the formula still produces higher rates and lower lump sums than the GATT,
especially now that “operation twist” has begun. Still, while the new rates are probably higher than GATT would have been, they may still be very low in historical terms. That would mean that the lump sum is still a comparatively good deal, just not as good
as it would have been without the PPA.
gfw had a good suggestion. Remember you are dealing with a moving target.
2011-10-06 00:42, By: Alan S., IP: [184.108.40.206]
L4: PPA interest rates
Don’t forget that youhave more things to consider about taking the lump sum and processing the IRA Rollover than how much the PPA vs GATT rates will generate. Don’t get me wrong, the amount of your lump sum is definitely a consideration. However, increased
investment options and flexibility of managing / operating your IRA carry a lot of weight in the decision. A well managed program can, in time, offset the lower lump sum amount.
2011-10-07 14:59, By: Jim F, IP: [220.127.116.11]