Reasonable rate of return? Use new ruling or old?

L1: Reasonable rate of return? Use new ruling or old?My question is: I have a client who wants to begin 72t withdrawals. My firm (who will go nameless) will only use 120% of Fed Midterm in accordance to “Revenue Ruling 2002-62”. My interpretation is that this ruling become effective for starting the withdrwals after 12-31-02 and that “Notice 89-25” can be used prior to 1-1-03. Any suggestions? He”s 57 with a balance of $375,000 and want $35,000 per year understanding that he will draw down principal. i used 8% per (plr 9047043) and $35,000 fell within that perameter.
Thanks David2002-12-03 11:15, By: David, IP: [127.0.0.1]

L2: Reasonable rate of return? Use new ruling or old?Hello David:
Your nameless firm is incorrect; you are at least partially correct. Notice 89-25 survives until 12/31/02. Thus, you are granted some additional interest rate flexibilty for the next 28 days. The interest rate you choose must be a “…rate that does not exceed a reasonable interest rate on the datepayments commence.” Presuming that you commence payments in 2002, what is a reasonable rate? Well, the IRS would tell you not to exceed 120% of the long term applicable federal rate which currently sits at 5.91%; substantially less than 8%.
See the dilemma?
TheBadger
wjstecker@wispertel.net
2002-12-03 11:36, By: TheBadger, IP: [127.0.0.1]