72t corrected over-withdrawl tax question
L1: 72t corrected over-withdrawl tax questionHi All,
I am the guy who tried to start a 72t plan last fall and accidentally withdrew too much because I exchanged shares directly to myself instead of exchanging them to a money-market fund within the IRA and then withdrawing the exact correct amount.
You all helped me at the time by alerting me that I could rollover the $236 excess amount back in, something I did after getting a second opinion from a tax specialist.
It is time to file my taxes now. Vanguard has sent me a 1099-R and of course it has the higher (incorrect) amount on it because that was the amount of my initial withdrawl. My understanding is that I report the full amount and then list $236 as a rollover amount and that is what I am planning to do, but I thought it best to check here first.
Secondly, do I also list that $236 as an incorrect exclusion amount?
Rewrite2012-03-12 17:12, By: Rewrite, IP: [18.104.22.168]
L2: 72t corrected over-withdrawl tax questionYou would show the full amount on line 15a of Form 1040, the amount of your 72t distribution on 15b and “rollover” on the line next to 15b. In other words, 15a less 15b will equal $236, the amount you rolled back.
That is all you need to do with respect to the corrective rollover. But you will also need to file Form 5329 (Part I, lines 1-3)to claim your 72t exemption because Vanguard will have shown Code 1 in Box 7 of the 1099R. On the 5329, show Code “02” on line 2, the 72t distribution amount on lines 1 and 2,and -0- on line 3.
Finally, you cannot do another rollover from this account for 12 months from the date of the $236 distribution you rolled back, so be very careful this year.
2012-03-12 17:49, By: Alan S, IP: [22.214.171.124]
L3: 72t corrected over-withdrawl tax questionGot it — Thank you — I appreciate the help very much.2012-03-12 18:24, By: Rewrite, IP: [126.96.36.199]
L4: 72t corrected over-withdrawl tax questionVangaurd should have sent you a 5498 that states the $236 was a rollover contribution. Does it say that it was reported to the IRS?2012-03-13 10:19, By: Scott, IP: [188.8.131.52]
L5: 72t corrected over-withdrawl tax questionForm 5498 is not due until 5/31, but some companies do send them out earlier.
You might question why the form would come so late, but remember that it is not only reporting the 12/31 value of the IRA account, but also the IRA contributions for the prior calendar year, including IRA contributions thru 4/15 that apply to the prior calendar year.2012-03-13 15:39, By: dlzallestaxes, IP: [184.108.40.206]