L1: 72t excessI have been takeing out 2500/ month for the last 3yrs with no problem- this past year my cpa recommended i withhold about 3k for fed. taxes and 880 for state- my financial company and i were not on the same page and my reported 1099r is 1300 over this yr- im trying to get them to take it back – any advice?2011-03-16 18:39, By: sshank, IP: [18.104.22.168]
L2: 72t excessPlease give us the figures of your annual distribution limit, how much you RECEIVED in 2010, and how much in addition was withheld and remitted to IRS and your State.
With SEPP 72-T plans., I never recommend withholding and remitting taxes because it is too easy for things to get screwed up. I and the taxpayer can always control estimated payments, but we cannot control mistakes and programming errors at financial institutions. I give my clients their RMD figures in January for the new year ( as soon as I get their 12/31 IRA statements), and strongly recommend that they take it out no later than February. I check the RMD distributions for ALL CLIENTS thruout the year, and especially in early December to avoid the 50% penalty for under-withdrawals, and SEPP 72-T over-withdrawals. I do not trust financial institutions or my clients to do in right. I maintain my own spreadsheet for all clients who have IRAs, ROTH IRAs, Inherited IRAs, and company retirement plans.2011-03-17 03:24, By: dlzallestaxes, IP: [22.214.171.124]
L3: 72t excessWhat form did you fill out to request this change in your withholding, or was this done with a phone call? If you gave them the correct info in writing (and have a copy of it) only asking for different tax withholdings, and did not ask for the Gross distribution to change, then I would think that they need to fix this for you. If you don’t have a copy of what you submitted, ask them to provide you with a copy of the form you submitted so your accountant can review it and see if it looks like they screwed it up.BTW- I am guessing that if your accountant had told you to tell them to startwithholding 10% FED and 2.94% STATE, this would not have happened. It would have gotten you to the $3k and a few dollars more thanthe $880 that he desired. Using the term “about $3k” does not work with data entry, and has to be converted for your payment frequency. Percent of Gross is a much cleaner method of defining tax withholding requests (in my estimation), and works even if you change the frequency of payment. Ken2011-03-17 03:46, By: Ken, IP: [126.96.36.199]
L4: 72t excessWhen I started my SEPP, I elected a 10% withholding rate. After a year or so, it became obvious that this was not enough so I had Vanguard raise it to 15%, which is just about right. I always check my statements to make sure that both the amount distributed and the tax withheld are correct. Although I trust Vanguard to do a good job, it never hurts to verify what they have done. They have not made any mistakes in this so far but I keep checking their number anyway.2011-03-18 04:06, By: Ed_B, IP: [188.8.131.52]