Let us take an example of an IRA owner who is 50 years of age. Let’s say the person has an account balance of $100,000 on which the annualized rate of return and interest rates are 8% and 4% respectively. Here is a table that depicts the comparison of payments using three different methods for five years.
These calculations are quite complicated and will take a lot of time and expertise. Financial consultants will typically charge a good amount of money to calculate the amount for. That is why we bring to you a calculator that can help you calculate 72(t) payments without much hassle.
Traditionally, changing the distribution method was not allowed without a penalty. Yet, rule changes in 2002 have allowed IRA owners to change their distribution from a fixed dollar method (amortization or annuity) to variable-dollar method i.e. life expectancy distribution without being penalized. Once the method is changed, it is applied to all subsequent years. This calls for even more complicated calculations and that is where a calculator can come in very handy.
Using an efficient online tool such a calculator for 72(t) payments will save your time, cost and effort. Yet, that is not all. A calculator will help you make a more educated decision based on your current financial position and future financial needs. As a result, you will be able to manage your finances in much more profitable manner.[like-gate] Thank you for sharing our blog, “Things to Know Before Using a Calculator for 72(t) Payments” [/like-gate]