59 1/2

L1: 59 1/2If your 5 years SEPP and 59 1/2 bday fall in the same tax year, and the line on your 1040 reads distriubutions how would the IRS know if you took out more prior to your actual 59 1/2 bday? And does it matter since it”s all taxable as ordinary income anyway in that tax year?2006-11-25 08:34, By: Bernie, IP: [64.12.116.204]
L2: 59 1/2First remember that the 5 years has nothing to do with age 59.5. The five year period ends exactly 365 days x 5 years plus about 2 extra days to make sure. During that 5 year period, the plan mut make 5 full annual distributions. Any less than 5 and you bust the plan.
In the year that you turn age 59.5 you will receive one 1099 for the period covered by the SEPP and one for the the amount distributed after the SEPP ends.
2006-11-25 10:17, By: gfw, IP: [24.148.85.129]

L2: 59 1/2Gordon,
With IRA custodians increasingly reticent to qualify valid 72t distributions as indicated by their refusal to offer the exception code, that would mean that Code 1 would be shown for all distributions. I believe the instructions only require separate 1099R forms if the distribution codes differ. Does this mean that custodians will therefore be abandoning the separate 1099R?2006-11-25 19:57, By: Alan S., IP: [24.116.66.98]

L2: 59 1/2Should really get 2 – the first for distributions before age 59.5 (either a code of 1 or 2) and then second for distributions after age 59.5 for a normal IRA distribution.2006-11-26 04:55, By: gfw, IP: [24.148.85.129]

L2: 59 1/2Hello Bernie:
At this point I think it is anyone”s guess what a trustee is going to do with respect to coding and issuance of 1099R”s. However, I think you should approach the issue raised by your question a bit differently:
1. Forget what trustees are going to do. They are confused & will therefore make decisions based on the their own self-interest.
2. The issue you raise has been very clearly decided by Arnold v. Commissioner (111 TC 250; 1998) that an extra distribution before the passage of a full 5 years (approx 1828 days) even though the taxpayer has surpassed age 59 1/2 IS A MODIFICATION and therefore all distributions are surtaxed.
Thus, if you are discovered/audited; it is a slam-dunk in favor of the IRS and there would be no way out.
TheBadger
wjstecker@wispertel.net

2006-11-26 07:52, By: TheBadger, IP: [72.42.67.101]