busted 72t transactions- can it be fixed?

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L1: busted 72t transactions- can it be fixed?An account with a 72t in place since 10/1/12 for a 52 year old, had additonal positions transferred into it in February 2013, and additional early withdrawals taken from it in March 2013- both transactions violating the 72t rules. If the custodian is able to reverse those transactions, can the 72t be “unbusted”? If not, will the violation penalty and interest apply from the first 72t distribution until the latest violation date, or for all 72t distributions until age 59.5 is attained?
thank you!
2013-04-10 16:09, By: LRDMN, IP: [24.179.244.53]

L2: busted 72t transactions- can it be fixed?From you statement, you have a busted plan – pay the penalty and start over. The penalty is due on any withdrawals while that were made from the busted SEPP plan.2013-04-10 16:33, By: Gfw, IP: [205.178.67.189]

L3: busted 72t transactions- can it be fixed?To clarify, the 10% penalty on a busted plan is retroactively based upon cumulative distributions from inception of the plan to the date it was busted, I think. Therefore, I believe that any distributions made after that date would be technically distributions of either a new plan, with a new plan account balance used for the calculation as of the date after it was busted, and distributions after that date applicable to the new plan. This works only if you catch it before 12/31 of that year. Otherwise, you are subject to 10% early distribution penalties also on the diistributions for that year after you busted the plan, and you then can start a new plan in the next calendar year using the account balance after the last distribution in that year, or 12/31.
In your situation, the best solution is to just pay the 10% penalty on the Oct 2012-Mar 2013 distributions, and start a new plan with the 3/31/213 balance.
If the transfer in was the broker’s fault, he should be responsible for paying the penalties, and there should be no fees for terminating the busted plan, nor any for starting a new plan.
If you were the responsible party, then it’s your cost for not getting professional advice.

2013-04-10 18:42, By: dlzallestaxes, IP: [98.111.190.136]