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

February 17, 2009

Assumed Rate of Interest

Your Guide

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

Domestic abuse distribution

A domestic abuse distribution is one that is made to domestic abuse victim, during the 1-year period beginning on any date on which the individual

Eligible retirement plan

The term “eligible retirement plan”, means a retirement plan to which a rollover contribution can be made. These are: (i)an individual retirement account described in

Qualified See-Through Trust beneficiary

Definition A qualified trust beneficiary is a trust that satisfies the requirements so as to be treated as a designated beneficiary.   For retirement accounts inherited

Saver’s Credit

Definition Also known as the Saver’s Tax Credit: Nonrefundable tax credit available to eligible individuals who make contributions to their retirement account. The saver’s credit

Be among the first to know when

IRA Rules
Change