Who calculates the plan’s interest rate?

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L1: Who calculates the plan’s interest rate?
BIO: Age 50, retired last week after 27 yrs. in law enforcement andtook the lump sum option of $490,000. Started second career this week where my new salary is 50% less than old salary, but I’ll only have to work 10 yrs. to receive pension #2. QUESTION
(hopefully not a stupid one): How is the calculation for monthly SEPP distribution performed? I went to my financial advisor, my tax professional, and the local IRS office and obtained 3 different monthly figures. The only person who had any clueregarding
a 72t exemption was my financial advisor. My concern is the monthly distribution will be too high, and I’ll owe a 10% penalty. Thanks in advance.
2011-09-18 13:55, By: I retired this week, IP: [76.98.85.101]

L2: Who calculates the plan’s interest rate?
Start with our calculator and perform your own calculations…
http://72t.net/72t/Calculator/Distributions- take the annual amount and divide by 12 to get the monthly amount.
The maximum interest rate that may be used is published by the IRS on a monthly basis. Historical rates can be found at
http://72t.net/72t/InterestRates/AFR/Mid-Term

2011-09-18 14:27, By: Gfw, IP: [205.178.73.77]

L3: Who calculates the plan’s interest rate?
The following Section from the Pension Protection Act may be worth checking out if your plan qualifies:
>>>>>>>>>>>>>>
[PPA] SEC. 828. WAIVER OF 10 PERCENT EARLY WITHDRAWAL PENALTY TAX ON CERTAIN DISTRIBUTIONS OF PENSION PLANS FOR PUBLIC SAFETY EMPLOYEES.
PPA
?828

] (a) In General- Section 72(t) of the Internal Revenue Code of 1986 (relating to subsection not to apply to certain distributions) is amended by adding at the end the following new paragraph:

`(10) DISTRIBUTIONS TO QUALIFIED PUBLIC SAFETY EMPLOYEES IN GOVERNMENTAL PLANS-

`(A) IN GENERAL- In the case of a distribution to a qualified public safety employee from a governmental plan (within the meaning of section 414(d)) which is a defined benefit plan, paragraph (2)(A)(v) shall be applied by substituting `age 50′ for `age 55′.

`(B) QUALIFIED PUBLIC SAFETY EMPLOYEE- For purposes of this paragraph, the term `qualified public safety employee’ means any employee of a State or political subdivision of a State who provides police protection, firefighting services, or emergency medical
services for any area within the jurisdiction of such State or political subdivision.’

>>>>>>>>>>
If both you and the plan qualify, you could take a distribution large enough to last you a year or possibly two. The 1099R distribution would be coded “2” and there would be no penalty. You could thereby delay the start of your 72t plan for a couple years.
Any time you can reduce the length of these plan you chances of setting them up for your maximum benefit are improved. Just like anything else, if you reduce the time frame, there are fewer unexpected events that should occur in the shorter time remaining.
In addition, in two years you would be two years older and it is very likely that interest rates will be higher than they are now. They cannot get much lower.
Note: Any portion distributed from the plan directly to you would require mandatory 20% withholding.

2011-09-18 17:40, By: Alan S., IP: [24.116.66.40]

L4: Who calculates the plan’s interest rate?
Alan:
Thanks for the SEC 828 reference. This is useful. However, I’m not sure it will apply to our poster. Here is his first sentence:
“BIO: Age 50, retired last week after 27 yrs. in law enforcement andtook the lump sum option of $490,000.”
It sounds like he has already processed an IRA Rollover and thus lost the option to make penalty-free withdrawals from his qualified plan.
Jim F
2011-09-26 16:30, By: Jim F, IP: [70.167.81.119]

L5: Who calculates the plan’s interest rate?
Ask the public safety plan administrator if you can cancel/reverse the lump sum distribution.
1. Had the plan administrator advised you in advance that you could retire and then take distributions exempt from the 10% early retirement penalties ? If not, they were negligent, and this could be a valid reason for them to correct their mistake from last
week.
2. If they had told you in meetings or documents, then see if they will accept it back because you did not understand what they were saying, and how it affected you.
3. If you did understand, but someone advised you to take the lump sum, then it was probably because they did not understand the special provision for retirewment at 50 for public safety employees. See if their management canb work with the formewr plan
to reverse the transaction.
4. If the “advisor” was really a broker who was looking more at his commissions for investing your rollover, rather than looking out for your best interest, then talk to the manager for them to get it reversed.
5. Worst case, you might just have to stick with what occurred, and starta SEPP 72-T plan. If so, then consider a 2nd IRA account, and use our reverse calculaator to determine how much goes into the SEPP 72-T IRA, and how nuch goes into your emergency safety
IRA account.
2011-09-26 16:46, By: dlzallestaxes, IP: [96.227.217.194]