I may be buying a gmib variable annuity that allows me to withdraw 5% annualy. That 5% equates to $31,250. The reasonable interest rate for a distribution in Sept.is 2.83%. Using that interest rate my withdrawal maximum appears to be $30,304 yet the agent says the difference is minimal and withdrawing the $31,250 will be fine.
Is it fine?
You would not use 2.83% unless you could not start the plan until September.If you can start the plan in August, and use a rate of 3.05, you can withdraw 31,215 annually, which is slightly less than the 5% allowed and still meets 72t requirements. You can use a rate that is lower than the rate allowed, but not higher.The bigger question is whether this amount will be sufficient to cover your living costs for around 6 years given uncertainty about those costs and about tax rates, which are headed up. If not sufficient, then other more complex planning will be needed since you should not start a plan that will likely have to be busted before your modification date.
More information please... What will be your age on 12/31 of this year?How much do you need annually to meed your needs?Why do you want to purchase the annuity? What benefits does it offer that would not be available in a rollover non-annuity IRA? Is there any employer stock that you own in the 401(k) that is subject to the NUA rules?Do you have other funds in addition to the $625k for emergencies? I'm sure that a few others may have a few more questions, but we can start with the above.
1)Starting the withdrawals in Sept. so as of now the reasonable interest rate is 2.83%
2)Based on that interest rate, and my age of 53, the withdrawal amount paid "to me" is $30,304
when calculated with a 72T calculator (4.85%).
3)If I went with the annuity companies allowance of a 5% withdrawal I would receive an annual withdrawal of $31,250.
I know it's a minor difference in money but I just want to make sure I get this done correctly.I guess the only "safe" withdrawal amount would be the one based on the reasonable interest rate.