Hardly a month goes by that we don't get questions regarding the numbers generated by our 72(t) (web and desktop) calculators. Most of the questions center on why our results don’t match the results they see in someone else’s calculator.
The first point that I would like to make is that we don’t check the results of our competitor’s calculators and compare them to ours. We are only concerned with the calculations that are published by the IRS and determining how close our results are to their published results. While there may always be a little variance due to rounding, the numbers should still be close.
After the release of Revenue Ruling 2002-62, the IRS published "FAQs regarding Revenue Ruling 2002-62". The page (as of 06/22,2004) can be found at
http://www.irs.gov/retirement/article/0,,id=103045,00.html#14
In their FAQ, they published sample calculations based on the following assumptions: Male, Age 50, 4.5% Interest, Single Life Expectancy and an IRA balance of $400,000. The results of their calculations are reproduced in the table below under the column IRS Sample. The results from our calculators are reproduced in the yyyZ Tools column. You can use the last column to reproduce the values of another calculator that you are reviewing.
Our calculators produce the same results as published in the IRS Sample.
| 72(t) Method |
IRS Sample |
IRA Tools |
??? |
| Minimum Distribution |
$11,695.91 |
$11,695.91 |
|
| Amortization |
$23,134.27 |
$23,134.27 |
|
| Annuity |
$22,906.88 |
$22,906.88 |
|
Sample Reports from our Desktop Calculator in PDF Format - We have carried the example one step further. For illustrative purposes we have assumed that the total IRA account was $450,000 and that $400,000 was used to fund the SEPP. In addition, the actual invesment rate was set at 5%. Click on the link to review the reports.