Discussion Forum

This forum is provided for informational purposes and it not intended to be relied upon as a source of investment, tax or legal advice. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of the 72tNET.com owners, or the sponsors or firms affiliated with the author(s). Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Please read our Forum Rules.

Edit your subscriptions by clicking on this link https://72tnet.com/community/subscriptions/ . Refer to this template when submitting a new post https://72tnet.com/forum-template/.

Withdrew 1/10th% too much - contact IRS?  


retper
Posts: 5
(@retper)
Trusted Member
Joined: 2 months ago

Somehow, I don't know how, I withdrew $12 too much of the max (120% for the given month) which was 1/10th of 1% too much (and Dec 2018 was peak interest rate, coincidentally). I believe the error might have been made on my misunderstanding that you must go by one sent % and amount going forward, same amount each year, based on that initial, chosen % and account balance (ignoring the one-time change you can make)

Not sure whether to going forward in subsequent years:

- continue to take out the same

- take out the correct amount

 

I believe option 2 would be the right thing to do, but would show a change, a discrepancy. I would assume best thing to do is contact IRS. I'm also being optimistic that the IRA won't get bent out of shape over a fraction of a % error (but could be wrong!)

Thank you. And yes, I'm just a bit of time past where I can make a 2 month change to the error!

 

6 Replies
Tracy
Posts: 7
Admin
(@tracy)
Trusted Member
Joined: 5 months ago

Hi Retper, 

I think the answer to your question depends on how long you have been taking 72t distributions and other factors. Would you please provide details as listed in this post? https://72tnet.com/community/72t-discussion-forum1/new-forum-post-with-template/

Tracy

Reply
retper
Posts: 5
(@retper)
Trusted Member
Joined: 2 months ago

Hi, this was my first year to do this, only two distributions from one IRA. I may have gotten a couple of number juxtaposed when transposing from an online calculator. I don't believe the other information would provide any additional help. Best to chalk this up to simple human error and go from there correctly. Cheers.

Reply
4 Replies
dlzallestaxes@msn.com
(@dlzallestaxesmsn-com)
Joined: 4 months ago

Trusted Member
Posts: 8

Please indicate all of the figures that apply to your situation, such as DOB, IRA balance used, interest rate used, and for which month, date and amount of first distribution and other distribution(s) in 2018. There are various aspects of your plan that you may not have done properly, and we need this information to determine if you are using the correct numbers.

I would never recommend contacting the IRS about your situation. The IRS does not have any record of the criteria you used in setting up your plan. You are the only one with that information. First of all, you might still be ok. Second, most reps at the IRS do not understand SEPP 72-T plans, and most tax and financial planning practitioners don't understand the nuances either. Third, if the amounts are not significant, the best option is to pay the 10% penalty on the 2 payments made in 2018, and start your plan over as of 1/1/2019, or later, depending when you made payments in 2019, and how much they were. Fourth, maybe a slight change in which date's balance you used, or the interest rate, might resolve the problem.

 

Reply
retper
(@retper)
Joined: 2 months ago

Trusted Member
Posts: 5

Thanks, somehow fat fingered the withdrawal amount of $11 off from several thousand. I'm not going to worry about it, will use correct amount next year ($11 less).

Balance date shouldn't matter, should be the last day of the previous year, but will look into that, i may have used a date/amount that was different and that may have been my error. Still plenty of time to think about this.

Reply
retper
(@retper)
Joined: 2 months ago

Trusted Member
Posts: 5

I'm suspecting the calculator I used online gave me a calculation/rounding error. I'm going with that. My original spreadsheets do reflect the amounts I had originally calculated. I'll use the correct amount going forward.

Reply
retper
(@retper)
Joined: 2 months ago

Trusted Member
Posts: 5

Now I know. I went back to my old versions of spreadsheets of calculations in Google Docs. I referenced this: https://72tnet.com/knowledge-base/account-balance/

I used the average of the balance between first distribution and the last day of 2018. That gave me the correct balance that shows the that I did the correct withdrawal. Based on above guidance.

Reply
Share: