Broke SEPP because of administrative blackout

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L1: Broke SEPP because of administrative blackout
I missed taking my total amount for my SEPP in 2007. This is a self administered (I request the withdrawls).
The amount in question $13467.00 is actually last a set of SEPP withdrawals totaling $43467.00 for tax year 2007. This 2007 SEPP withdrawal was taken on Jan 2, 2008 from my account because of an administrative blackout on my 401k account from December 28,2007 thru January 1,2008. This administrative blackout occurred because the custodian for the 401k plan is being changed from Hewitt to Fidelity Investments. I was informed by the plan administrator that this blackout was required to transfer records form the old to the new custodians and my inability to take the final withdrawal for 2007 during the last week of 2007 was completely beyond their and my control. They did provide me with a document explaining the blackout dates and reasoning. The withdrawal of $13467 was taken on the first available day (January 2,2008) but will be reflected on form 1099R for tax year 2008.This SEPP was begun on April 30, 2001 and I turn 59 _ (DOB=08-15-48) on Feb 15, 2008.
Irealize that this problem and probably some future ones are the result of me doing a self administered SEPP program. I’ve survived 2 IRS audits and I’m so far into it now and so close to the end that it could be a disaster.
Is there anything I can do to fix this ?
When do I have to take my final withdrawl ?
Does it have to be before feb15th?
Is the correct amount $5680?
Thanks in advance for any info that help my cause.2008-02-08 05:56, By: Paul, IP: []

L2: Broke SEPP because of administrative blackoutHello Paul:
Another case of custodian / trustees looking out for themselves 1st and you 2nd.
I will focus on the $13,467 which should have been distributed in 2007 and was actually distributed in 2008. This has happened to several of my clients in the past and our solution-to-date has been to treat it as if it had been distributed properly, e.g.
1. Declare the $13,467 on your 2007 federal income tax form 1040 line 15b. As a result your line 15b will be $13,467 higher than the 1099R you have received.
2. Attach an ALERT to your 2007 tax return and explain what has happened on one page. I would not attach supporting materials at this point.
3. Wait it out for 1 – 2 years and see what, if anything, you receive from the IRS. If nothing, good, if something, reply with all the details.
4. In 2008, your will receive a 1099R for $13,467 which you have already declared as income in 2007. Essentially, draft a 2nd ALERT for your 2008 explaining the reversal.
Regarding 2008 SEPP plan withdrawals, I would make none. You have already completed 6 plus years and there is no need to take a withdrawal between 1/1/08 and 2/15/08. Startign 2/16/08 your done — take whatever distributions you want.
P.S. How did you fare in the two previous audits?

2008-02-08 07:24, By: TheBadger, IP: []

L2: Broke SEPP because of administrative blackoutBadger:
I”m sorry that Paul is having this problem but am curious as to whether or not the IRS, in your experience, recognizes a Force Majeure type situation for SEPP owners. It would seem to be one thing if someone does not follow the rules but quite another when they can not follow the rules. Your advice looks like a very reasonable way to address this situation.
Ed2008-02-08 16:09, By: Ed_B, IP: []

L2: Broke SEPP because of administrative blackoutHello Ed:
By its absense, the IRC does not formally recognize “force majeure” as a tolling or delaying rightful casue. However, one can frequently (although not in SEPP / 72(t) land) find majeure type language; often legislated or the Commisssioner of the IRS will issue a notice granting some fornm of “time relief” due to natural disasters, etc. Further, the courts do recognize force majeure in multiple unilateral/bilateral situations. As a result, I suspect that the IRS (as the keeper & enforcer of the IRC) are cognizant of this principle but simply will not directly address the issue and prefer to deal with taxpayers on a one-on-one basis.
2008-02-08 17:00, By: TheBadger, IP: []

L2: Broke SEPP because of administrative blackoutAnother reason to set up the 72t through an IRA account unless there is no other viable solution. There are just too many diverse sources of trouble regarding employer plans with respect toinflexible 72t requirements. Over the average term ofa plan, an unlucky taxpayer could be victimized by two or three totally different, unrelated, and unanticipatedproblems, with a reduced capacity to make an adjustment to alleviate the problem in time.2008-02-09 16:57, By: Alan S., IP: []

L2: Broke SEPP because of administrative blackoutWould he be smart to contact the trustee and ask for help? Sometimes a vague reference to a lawsuit gets people interested. If this turn out to be a “disaster” rather than an inconvience, I know who I would think is responsible. Just thinking out loud. A properly worded letter can sometimes get people with power involved. If he waits, the trustee could come back and say, “We never were contacted, what were we supposed to do?” Maybe they could send in corrected forms or something to help him?2008-02-09 17:38, By: chuckles8888, IP: []

L2: Broke SEPP because of administrative blackoutBadger:
OK, thanks for the insight. They recognize the principle, won”t be bound by it, and address it on a case-by-case basis.
Ed2008-02-13 17:02, By: Ed_B, IP: []