recalculation interest rate

L1: recalculation interest rateI would like to withdraw 4.5% from my IRA for each year throughout my upcoming SEPP plan. Iplanto perform annual recalculation each year. I will use an appropriate reasonable interest rate each year, always under the limit.
For example:
Year one. Age 52, IRA balance $1.0 million. Reasonable interest rate to receive 4.5% (45k) – 2.42%
Year two. Age 53. IRA balance $1.1 million. Reasonable interest rate to receive 4.5% (49.5k) – 2.30%
This seems fine to me. Is changing the reasonable interest rate in each year’s recalculation ok? Thanks in advance.
2005-12-08 01:51, By: Jeff, IP: [166.87.255.131]

L2: recalculation interest rateWhat you are proposing is really outside of the existing three methods outlined in 2002-62 and outside of the PLRs issued since 2002-62 as they relate to annual recalculation.
To be within the PLRs, you would have to adopt either the annuity method or the amortization method with the interest rate specified (example =90%, 100%, 1020%, etc.) the previous year”s AFR. Then on an annual basis all facors (age, interest rate, balance,etc)would be recalculated.
If you really want to use the method that you outlined – I strongly suggest that you request your own PLR outlining the exact circumstancessince you are really asking the IRS to add method number four to the existing three reasonable methods. Good luck!2005-12-08 05:24, By: Gfw, IP: [172.16.1.72]

L2: recalculation interest rateThanks, Gfw. So, for example, if I use 100% of the federal mid term rate for the first year, I must use 100% of the rate in effect at the time ofeach and every recalculation.
I don”t understand the logic behind this. It seems to me that the taxpayer should be able torecalculate usingwhatever interest ratehe chooses, as long as he does not exceed the reasonable interest rate in effect at that time.
.2005-12-08 07:02, By: Jeff, IP: [166.87.255.133]

L2: recalculation interest rateUnfortunately the taxpayer doesn’t make the rules, but the IRS does. And the plan that you outlined falls outside the rules since it doesn’t use one of the three acceptable methods.
Assuming that you start with the amortization method, you would define the interest rate as I outlined and each year the recalculation would include a change of interest rates,an age change andthe actual balance on the recalculation date.
From your original post, all you want is to change the interest rate to whattever you want – not acceptable. However, as I stated earlier, you could always apply fr a PLR -it may be worth the cost.2005-12-08 07:08, By: Gfw, IP: [172.16.1.72]