Annual Recalulation of 72T
Due to market drop and low reasonable interest rates a clients annual recalc, is at unacceptable level. Any options? Will the IRS budge on the rates?
Due to market drop and low reasonable interest rates a clients annual recalc, is at unacceptable level. Any options? Will the IRS budge on the rates?
Permalink Submitted by Alan Spross on Tue, 2009-01-13 23:21
No, there has been no proposed relief for 72t participants. One reason is that the vast majority of these plan do NOT use the RMD method or the recalculation option for the amortization of annuitization methods.
I recognize that these recalc plans have backfired, with participants getting hit both by sharply reduced year end balances and also by a large drop in the mid term rate. And you only age by one year even if it feels like much more than that.
The only options at this point are to bust the plan as of 2008 and start a new plan for 2009 OR come up with other funds by getting a loan as well as cutting living costs and try to carry on with the reduced 72 t calculation. If there are other retirement account outside the 72t plan, they can also be tapped subject to penalty to protect the 72t plan.