72T payments in first year

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L1: 72T payments in first yearI retired in 2002 at the age of 56 but did not start distributions from my SEPP until June03. I am utilizing the minimum distribution method. Do I take the full amount for this year or should it be half as I began payments mid year?2003-12-21 11:36, By: Matt, IP: [66.2.160.47]
L2: 72T payments in first yearHello Matt:
Either would be fine.
TheBadger
wjstecker@wispertel.net
2003-12-22 17:54, By: TheBadger, IP: [38.116.134.130]

L2: 72T payments in first yearI would be curious to know, aside from various private letter rulings, where in the Regs it allows a taxpayer to take 1/2 of the calculated annual amount due to a mid-year start date, and then the full amount in the next year. I realize that MANY taxpayers, CPA”s and so called “industry experts” apply PLRs as if they were written for them, but I don”t apply that theory…as an IRAcompliance officer for a rather large investment company.
Please clarify for me if your response (Badger) is based on the PLR”s and/or industry “standard” or if it verified in the Regs, as I have this discussion almost once daily with our advisory clientelle.
thanks !2004-01-07 11:15, By: IRAGuy, IP: [63.103.206.10]

L2: 72T payments in first yearThere are no regulations on the subject of “stub years”; e.g. taking 1/4th or 1/2 the annual distribution in the first year. Instead, there aer easily a dozen PLRs issued between 1990 & 2000 all affirmatively authorizing such treatment.
TheBadger
wjstecker@wispertel.net

2004-01-07 12:55, By: TheBadger, IP: [38.116.134.130]

L2: 72T payments in first yearYes, but an IRA custodian cannot report that an exception has been met knowing that the taxpayer is basing their series of payments on a private letter ruling, no matter how numberous those rulings are. To that end, what recourse does the taxpayer have, besides filing a 5329 with their 1040 and stating that they structured their payments as described above and crossing their fingers? And, if they do that, what are their chances that the excise tax will be waived? 2004-01-07 12:59, By: IRAGuy , IP: [63.103.206.10]

L2: 72T payments in first yearYes, but an IRA custodian cannot report that an exception has been met knowing that the taxpayer is basing their series of payments on a private letter ruling, no matter how numberous those rulings are. To that end, what recourse does the taxpayer have, besides filing a 5329 with their 1040 and stating that they structured their payments as described above and crossing their fingers? And, if they do that, what are their chances that the excise tax will be waived? 2004-01-07 12:59, By: IRAGuy , IP: [63.103.206.10]

L2: 72T payments in first yearYes, but an IRA custodian cannot report that an exception has been met knowing that the taxpayer is basing their series of payments on a private letter ruling, no matter how numberous those rulings are.
I would disagree. Actually, many trustees/custodians put whatever the taxpayer says to put on the 1099R with no due diligence whatsoever.Now, I am not necessarily saying that this is right or wrong; however, I have yet to find or read any substantive authority that sets out any trustee/custodian levels or required dur diligenceon this issue.
To that end, what recourse does the taxpayer have, besides filing a 5329 with their 1040 and stating that they structured their payments as described above and crossing their fingers?
Irrespective or my comment above, completing 5329 has the same effect as a “2” in the reason code field of a 1099R.
And, if they do that, what are their chances that the excise tax will be waived?
I think virtually 100%; at least I put my John Han**** on unqualified opinion letters on this issue every day.
TheBadger
wjstecker@wispertel.net

2004-01-07 13:08, By: TheBadger, IP: [38.116.134.130]