Are you hoping to tap your IRA before age 59 1/2 without paying a 10 percent penalty? In several private letter rulings the IRS has permitted the use of hybrid methods that combine the best features of the various withdrawal techniques. These hybrid methods generally result in higher payments than if any of the methods were used on their own. However, if the account balance declines, the payments may be reduced.
Payments must be substantially equal, continuing for five years or until 59 1/2, whichever comes later.
You must recalculate the distributions using a new IRA balance and interest rate each year, along with being a year older.
You must value the IRA on the same day each year and use the same type of interest rate in the same month. Thus, if you use the January long-term rate in the first year, you must select the January long-term rate each year.
You must also use the same mortality table to make the calculation each year, among the nine or 10 mortality tables approved by the IRS.
