If I knew the dollar amount I "needed" for income was $35,000/year and I was looking to draw from an IRA that had $600,000 at month-end last month, and I was turning 50 this year. According to both of these two current 72t calculators-calculator/), at the 5% interest rate assumption, these are the distributions that come up:
- Required Minimum (Single Life) : $16,574.59
- Required Minimum (Uniform Life) : $12,371.13
- Amortization (Single Life) : $36,187.34
- Amortization (Uniform Life) : $33,106.19
From the very first withdrawal, am I forced to take the $36,187.34, or can I start with $35,000 and keep that amount until 59 1/2?
EDIT TO ADD: For sake of discussion, assume I have other IRA I can set up SEPP in the future if needed and won't need to ever make an adjustment to this one, or if I go back to work or whatever.
72(t) – can you take a fixed amount that is less than 5% from the start?
byu/iamthinksnow infinancialindependence
Posted by iamthinksnow
4 Comments
# How are interest rates determined?
The taxpayer must select an interest rate that is **not more than** the greater of:
1. 5%; or
2. 120% of the federal mid-term rate published in IRS Revenue Rulings ([applicable federal rates](https://www.irs.gov/applicable-federal-rates)) for either of the two months immediately preceding the month in which the first payment of the SoSEPP is made.
[Back to top](https://www.irs.gov/retirement-plans/substantially-equal-periodic-payments#top)
Source: [Substantially equal periodic payments | Internal Revenue Service](https://www.irs.gov/retirement-plans/substantially-equal-periodic-payments)
(bolding is mine, means yeah, you can go lower)
In that scenario, I’d recommend creating a second IRA and moving any money not needed to hit the required ratio into the other IRA. That gives you flexibility to tap that money with a second 72t down the road.
Don’t do that. Move part of the money into a new IRA such that the balance, when using 5% rate, gives you the payment amount you want.
You’ll need to use a different interest rate.
Or don’t worry about such a small amount that’s over and just put it in your brokerage account.