SEPP SAMPLE FORM

L1: SEPP SAMPLE FORM I have a question regarding the form on this site titled “SEPP Sample Form for Documentation” that states “the
SEPP plan is effective on
the date of the first distribution and the interest rate selected must
also be selected based on the maximum interest rate on the date of the
first distribution.” Does this mean that the interest rate does not
have to be the rate from 1-2 months prior to starting the distribution?
2009-05-25 20:03, By: shell, IP: [70.177.3.159]

L2: SEPP SAMPLE FORMThe statement that you are questioning…
The SEPP plan is effective on the date of the first distribution and the interest rate selected must also be selected based on the maximum interest rate on the date of the first distribution.
From the form…

3)
Interest Rate: ________% for Amortization and Annuitization Methods.

To comply with RR 2002-62, the maximum rate should be limited to 120% of the Federal Mid-TermAFR for either of the two months immediately preceeding the month that the first payment is to be made. Once established, it should remain fixed.

Is your question answered?

2009-05-25 20:14, By: Gfw, IP: [216.80.125.206]

L3: SEPP SAMPLE FORMIn other word if the interest rates were 4% and 4.2% in the prior 2 months, then the MAXIMUM rate for the SEPP would be 5.04%. You could use 1% if you wanted to, but it probably wouldn’t make any sense to do so. You could not use 6%, even though that might be the rate you needed to generate the cash flow distribution you needed.2009-05-26 02:20, By: dlzallestaxes, IP: [96.245.168.66]

L4: SEPP SAMPLE FORM”In other word if the interest rates were 4% and 4.2% in the prior 2 months, then the MAXIMUM rate for the SEPP would be 5.04%. ”
What? Now you confused me. I thought those rates (4% & 4.2%) in his example were the 120% rates to use. I didn’t think you could multiply the largest 120% rate againby another 120%. Is that really true, because I must have missed that trick.2009-05-26 18:48, By: mikex, IP: [192.91.173.42]

L5: SEPP SAMPLE FORMI think what DLZ meant to say is, if the Federal Mid-term Rate (FMR) is 4% and 4.2% respectivelyfor the prior 2 months, then the max rate for each month is 4.8% and 5.04% respectively.You may choose either of these two month’s rate for your computation. Logically you would choose the 5.04% rate unless you had some other compelling reason (your choice) to choose a different rate. It is legal to choose any rate less than 5.04% for your computations in this example.
Jim2009-05-26 19:20, By: Jim, IP: [70.167.81.119]

L6: SEPP SAMPLE FORM”I think what DLZ meant to say is, if the Federal Mid-term Rate (FMR) is 4% and 4.2% respectivelyfor the prior 2 months, then the max rate for each month is 4.8% and 5.04% respectively.”
Ugh. I’m lost now. How can I re-phrase it – I thought that the 4% & 4.2% numbers in the example were already 120% rates. If they aren’t, then what are they? Why is he multiplying them by120% when there is already a published120% rate in a table to use here
http://www.72t.net/InterestRates/RatesFor72t.aspx
What tables are you guys talking about, if you aren’t using the 120% table above???2009-05-26 19:39, By: mikex, IP: [192.91.173.42]

L7: SEPP SAMPLE FORMOK, Mike. Let me clarify what I said by expanding on my quote which you used:
“I think what DLZ meant to say is, if the Federal Mid-term Rate (FMR) is 4% and 4.2% respectivelyfor the prior 2 months, then the max rate for each month is 4.8% and 5.04% respectively.”
The 4.8% and 5.04% represent 120% of the 4% and 4.2% FMR in this example.
If you will follow the link you included in your last post and read the paragraph / sentence at the top of the page, you will have a clear explaination of this concept. Also, the rates displayed on this site, same link you used, reflects already calculating the 120% of the FMR for a particular month.
Jim2009-05-26 20:05, By: Jim, IP: [70.167.81.119]

L8: SEPP SAMPLE FORM
Yes, but I guess I’m confused about why you would even calculate the 120% rate when it is listed clearly already in the IRS published table, as shown belowfor the current month. I have been reading this site for several years, and I may have missed it, but I always thought you just went to the table and got the rate without any muss or fuss, as on this site or as shown below, why is dlzallastxs calculating it, for what reason, if it’s already done??? Why complicate anything, I guess is my question?

REV. RUL. 2009-16 TABLE 1
Applicable Federal Rates (AFR) for June 2009

Mid-term
AFR 2.25% 2.24% 2.23% 2.23%
110% AFR 2.48% 2.46% 2.45% 2.45%
120% AFR 2.71% 2.69% 2.68% 2.68%
130% AFR 2.93% 2.91% 2.90% 2.89%
150% AFR 3.39% 3.36% 3.35% 3.34%
175% AFR 3.96% 3.92% 3.90% 3.89%
http://www.irs.gov/pub/irs-drop/rr-09-16.pdf

2009-05-26 20:24, By: mikex, IP: [192.91.173.42]

L7: SEPP SAMPLE FORM
Jim is right… the rates that we publish are the 120% Federal Mid-Term Rates.2009-05-26 20:18, By: Gfw, IP: [216.80.125.206]

L4: SEPP SAMPLE FORMI did not look up the specific interest rates for March and Apil, 2009because I was giving a hypothetical example, and purposely did not want to reflect on the current abnormally low interest rates. I started my response by saying ” IF THE INTEREST RATES WERE”. I ndid not say that these were the 120% of federal rates, which is why I then multiplied each of the 2 rates by 120%.
It would be better if throughout this website people read what was written, instead of interpreting what they want it to mean. Many threads go on forever with explanations back and forth because of this.2009-05-27 00:57, By: dlzallestaxes, IP: [96.245.168.66]

L5: SEPP SAMPLE FORMI did carefully read what was written. You didn’t carefully explain what you were talking about –
“In other word if the interest rates were 4% and 4.2% in the prior 2 months, then the MAXIMUM rate for the SEPP would be 5.04%. ”
You simply referred to “interest rates”, and didn’t specify what interest rates, you could be talking about any interest rates as far as the audience is concerned. That’s why it’s confusing. Also, I didn’t “interpret” anything, I asked for clarification – that’s the correct and rational thing to do. What do you expect people to do when you aren’t specific with terms in your answer? Even though I know a fair amount about it now (no, not an expert) there are probably many reading that can get easily confused by all these terms and rates. That’s why you should be very specific in your explanations.2009-05-27 12:24, By: mikex, IP: [192.91.173.42]

L2: SEPP SAMPLE FORMI think we haveexhausted this thread and now everyone understands the definition of interest rate as it was used on the SEPP Sample Form.
>> Lets move to a New Topic << 2009-05-27 12:59, By: Gfw, IP: [216.80.125.206]