1. Help Center
  2. Compliance
  3. Frequently Asked Questions

Can I change from one method to another in calculating substantially equal periodic payments?

Yes. Rev. Rul. 2002-62 permits a one-time change from either the amortization method or the annuitization method to the required minimum distribution method.

For example, assume Sam started receiving distributions from his IRA in annual substantially equal periodic payments in 2007 at age 50. His annual payment of $65,809 was originally calculated using the amortization method. Sam would like to use the special rule in Rev. Rul. 2002-62 allowing a one-time change to the required minimum distribution method to determine a new annual distribution amount beginning in 2011. For this one-time change in method, Sam will determine an annual distribution amount for 2011 using his IRA account balance on March 31, 2011 ($750,000), and a single life expectancy of 30.5 (obtained from Regulations §1.401(a)(9)-9, Q&A-1, using age 54).

Under the new method, the 2011 distribution amount is $24,590 ($750,000/30.5). Sam must use the required minimum distribution method to determine the annual distribution amount for subsequent years.

Source: https://www.irs.gov/retirement-plans/substantially-equal-periodic-payments