72t distribution error by custodian

L1: 72t distribution error by custodianTaxpayer rolled over 401k and split into 2 IRAs. The 72t calc was based on the aggregate IRA totals. The calcs were made and the taxpayer selected the amortization method and elected to use only one of the IRAs from which to make the distributions. Distributions began in July of 2002 and account holder elected to make a full years distribution for 2002. Distributions were set up monthly. The custodian was notified in writing to change the monthly distribution in January of 2003 since the required payments would now be distributed over a 12 month schedule vs the 6 months for 2002. The custodian failed to make the changes and was notified in writing again in July to reduce the payments as the new letter instructed so that the account holder could still meet the required distribution for the year. The custodian failed once again to reduce the payments as needed resulting in the account owner receiving an excess distribution. After paying the early withdrawal penalty and the interest penalty on the 2002 and 2003 distributions, can the account owner continue in 2004 under the same SEPP plan or must she recalculate? If she must recalculate what date is used for account values on which to base the recalc? Can she recalculate under the 3 approved methods and select one or must she use the same method as previously used?2003-12-30 16:09, By: mike, IP: [68.21.88.117]
L2: 72t distribution error by custodianHello Mike:
1st & foremost, presuming adequate documentation, it sounds as though your client has a “breach of fiduciary duty” action against the trustee to recover the penalties & interest paid for distributions made in 2002-3.
Secondly, the law is fairly clear on terminating one SEPP plan and then commencing a second SEPP plan in a subsequent tax year — just pretend the old plan did not exist & start from scratch making all new assumptions.
TheBadger
wjstecker@wispertel.net

2003-12-30 19:05, By: TheBadger, IP: [38.116.134.130]

L2: 72t distribution error by custodianIs it possible to have the name of the custodian that madethis error?
I am getting ready to establish adistribution schedule and now I”m becomingconcerned about the inability of custodians to do as they are instructed. If you don”t want to divulge the nameI understand.
Anyone else have any insight into a custodian that shows an understanding and willingness to handleSEPPs correctly?
2004-01-03 14:39, By: Still Green, IP: [216.161.218.74]

L2: 72t distribution error by custodianPlease do NOT name any names – I would have to remove the post and the discussion forum thread. If you have a problem with the Custodian/Trustee you should deal with them, either directly or through your legal counsel.
2004-01-03 14:43, By: Gfw, IP: [12.221.34.192]