Save time with our cheat sheets, fact sheets, checklists & books!

February 17, 2009

Assumed Rate of Interest

Print

Definition

Rate of interest on which an account balance is assumed (or projected) to grow.  The assumed rate of interest must be within IRS approved standards. For instance, when calculating a SEPP using the annuitization or amortization methods, an assumed rate of interest that is not more than 120 percent of the federal mid-term rate (determined in accordance with IRC § 1274(d) for either of the two months immediately preceding the month in which the distribution begins) can be used

An assumed rate of interest is also used to calculate projected earnings for target benefit plan and defined benefit plan assets .

Referring Cite

ERISA §302(c)(3); IRC §412(c)(3), IRC § 401(a), Revenue Ruling 2002-62

Additional Helpful Information

Assumptions that do not use a reasonable rate of interest may result in the computation being disallowed by the IRS

More

Keep Learning

Applicable RMD Age

Applicable RMD Age The first year for which an IRA owner or plan participant must begin to take RMDs from their tax-deferred retirement account. RMDs

SIMPLE 401(k) Plan

Definition A SIMPLE 401(k) plan is a 401(k) plan established by a small business for it’s employees. Earnings accrue on a tax-deferred basis and distributions

Required Minimum Distribution (RMD)

Definition The minimum amount that must be withdrawn from retirement accounts, including qualified plans, 403(b) accounts, 457(b) accounts or IRAs, each year.  For retirement account

Required beginning date (RBD)

Definition The date by which a retirement account owner must begin distributing required minimum distribution (RMD) amounts from a Traditional,  SEP or SIMPLE IRA, a

Be among the first to know when

IRA Rules
Change