### Periodic Payments

Payments can begin at any time, for any reason. The rule requires the series of substantially equal periodic payments to last for five years

OR until the IRA owner reaches age 59 1/2, whichever is longer. Any changes to the payment amount prior to meeting the required distribution period, may result in a 10% penalty tax plus interest applied retroactively to all previous payment amounts.

### Calculation Methods

The IRS has approved three acceptable calculation methods to determine the required dollar amount of the series of payments:

- Required Minimum Distribution (RMD) Method: This is the simplest method and typically results in the lowest required payout amount. The current value of the IRA is divided by a life expectancy factor. This is the only method that is recalculated every year and the payment amount changes annually as the account value changes.
- Fixed Amortization Method: The required distribution amount is determined by amortizing the account value over a life expectancy assumption and a reasonable interest rate factor. This calculation sets a fixed dollar amount to be distributed.
- Fixed Annuitization Method: This method applies an annuity factor and a reasonable interest rate assumption to calculate a fixed annual required distribution amount based on life expectancy.

### Reasonable Interest Rate

The IRS requires the interest rate used for 72(t) payments to be no more than 120% of the Federal Mid-Term rate for either of the two months immediately preceding the month in which the distribution begins. The applicable annual 120% federal mid-term rates are: 0.42% for September, 2020, 0.46% for October, 2020 and 0.47% for November, 2020. These rates may be slightly lower if you elect monthly or quarterly payments. The maximum rate for your selection will display in the interest rate assumption field.

### Life Expectancy Tables

There are three different life expectancy tables that the IRS allows you to use when calculating your SEPP with the 'Fixed Amortization' or the 'Required Minimum Distribution' methods. It is important to note that once you have chosen a distribution method and life expectancy table, you cannot change either throughout the course of your distributions. (Except for a one-time change from the Annuitized or Amortized methods to the Life Expectancy method, see SEPP definition for more details).

The three life expectancy options are:

Uniform Lifetime - This is a non-sex based table developed by the IRS to simplify minimum distribution requirements. The uniform lifetime table estimates joint survivorship, but does not use your beneficiary’s age to determine the resulting life expectancy. This table can be used by all account owners regardless of marital status or selected beneficiary.

Single Life Expectancy - This is a non-sex based life expectancy table. This table does not use your beneficiary's age to calculate your life expectancy. This table can be used by all account owners regardless of marital status or selected beneficiary. Choosing single life expectancy will produce the highest distribution of the three available life expectancy tables.

Joint Life Expectancy - This is also a non-sex based life expectancy table for determining joint survivorship using your oldest named beneficiary.