The approved calculation methods for a 72t must be applied, and there is a problem here because use of the reverse calculator at the 72t site produces a required IRA balance of 525,299. to generate the 23,400 annual distribution. Due to extremely low interest rates, the amortization method only yields about 4.5% annual distribution, and I used the lower rates required with December starting dates since it is too late to get a Nov distribution now.

Further calculation indicates that her max monthly distribution would therefore be limited to 1,485 using her entire IRA balance of 400k. If she cannot live with that reduced distribution, there is no point starting a 72t plan because she would have to bust the plan sooner or later, probably sooner. See reverse calculator link posted below:

http://72t.net/72t/Calculator/Reverse

Therefore, the short answer to Q 1 is that you must use the approved 72t methods to determine the allowed payment. While you can segment the accounts any way desired, since using the entire 400k still comes up short, you couldn’t use less than the total balance in this case. What you could do is use the entire 400k for the 72t calculation, and then partition the IRAs into one that will produce the annuity payout of 1,485 monthly using the insuror’s tables. But she could not tap the other accounts prior to 59.5, because they would be considered part of the 72t initial account balance even though there were no distributions being taken from them.

Her problem is the rock bottom interest rates, and whether you use an annuity or not, the needed amount cannot be generated.

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