Michael J. Kulzer & Jan K. Bielman-Kulzer - Page 10




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               switch to the required minimum distribution method to                  
               determine the payment for the year of the switch and                   
               all subsequent years and the change in method will not                 
               be treated as a modification within the meaning of §                   
               72(t)(4).  Once a change is made under this paragraph,                 
               the required minimum distribution method must be                       
               followed in all subsequent years.  Any subsequent                      
               change will be a modification for purposes of §                        
               72(t)(4).                                                              
               Petitioners claim that Mr. Kulzer used the "fixed                      
          amortization method" described in Notice 89-25, supra, to compute           
          the substantially equal periodic payments to be withdrawn from              
          his retirement account(s).  Thus the parties agree that the fixed           
          amortization method described in Notice 89-25, supra, is a                  
          permissible way in which to calculate a series of substantially             
          equal periodic payments for purposes of section 72(t)(2)(A)(iv).            
               Notice 89-25, Q&A-12, 1989-1 C.B. at 666, describes the                
          fixed amortization method as follows:                                       
                    Payments will also be treated as substantially                    
               equal periodic payments within the meaning of section                  
               72(t)(2)(A)(iv) if the amount to be distributed                        
               annually is determined by amortizing the taxpayer's                    
               account balance over a number of years equal to the                    
               life expectancy of the account owner or the joint life                 
               and last survivor expectancy of the account owner and                  
               beneficiary (with life expectancies determined in                      
               accordance with proposed section 1.401(a)(9)-1 of the                  
               Regulations) at an interest rate that does not exceed a                
               reasonable interest rate on the date payments commence.                
               For example, a 50 year old individual with a life                      
               expectancy of 33.1, having an account balance of                       
               $100,000, and assuming an interest rate of 8 percent,                  
               could satisfy section 72(t)(2)(A)(iv) by distributing                  
               $8,679 annually, derived by amortizing $100,000 over                   
               33.1 years at 8 percent interest.                                      








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