different 5329 question
L1: different 5329 questionI had two different SEPP’s running with two different custodians for 2010. I was over 59 1/2 the entire year, and I now see that both 1099-R’s are coded with a “7”. Last year, one had a “2” and the other had a “1”. One SEPP was in final year in 2010, and the other one has another year + to go. In the past, I did the 5329 each year, listing all SEPP $$ withdrawals, and then listed the code “2” as the reason to exclude a penalty on the$$ portion that was coded with a “1”. From reading the instructions on 5329 it looks like with code ‘7’ and my age in 2010, I no longer have to fill out that form, even though my payments were a continuation of my SEPP. I was told by independent investment advisorof custodianthatcoded with a “2” in past years thatshe was told by custodian the code is an age related calculation. I am assuming the one that used to use code 1 had same reason for coding mine with a “7”for 2010.Any comments? KEN2011-01-27 05:26, By: Ken, IP: [184.108.40.206]
L2: different 5329 questionYou did not indicate when you started each plan.
Basically, once you reach age 59 1/2, your SEPP 72-T plan terminates, and you are no longer subject to the 10% penalty, UNLESS you have not yet completed 60 months in the plan.
Your 2 plans could fit different of these criteria.
If you completed the 5 years/60 months in 2009, and because you were 59 1/2 as of 12/31/2009, then you are no longer subject to the 10% penalty regulations. If you had completed 5 years, and then became 59 1/2, then the payments before 59 1/2 would have had a different code from the distributions after 59 1/2.
Give us ALL of these facts, and we can answer you more specifically about each plan.2011-01-27 06:19, By: dlzallestaxes, IP: [220.127.116.11]
L3: different 5329 questionDLZ,
As I said in my earlier post, the first one was just completed at end of 2010, (and 60 month clock actually runs out in March 2011), so it started in March 2006 with full year distribution in all five calendar years, and the second one that still has more than a year to go,will end when I am 62, again, after five years of payments. I started when I was 57. I thought by mentioning my age, it was clear enough that both plans had to run beyond age 59 /1/2. KEN2011-01-27 14:58, By: Ken, IP: [18.104.22.168]
L4: different 5329 questionSorry. There are so many postings that I only relate to the info on a given “thread”. I can’t remember that someone had already posted elsewhere.
Based upon the facts, for 2010 I think that both 5329 forms should have the same code. It will be 2011 that the first one should have 2 different 5329 forms, and the other plan will have its own. Then in 2012 the 2nd planshould have 2 different 5329 forms.
I say “should” because some companies do not have a clue how to do this correctly, and will issue just 1 form 5329 because they are oblivious to the fact that you completed the plan ad are 59 1/2, and therefore distributions after that are not under the SEPP 72-T plan.2011-01-27 16:58, By: dlzallestaxes, IP: [22.214.171.124]
L5: different 5329 questionDLZ,
I was referring to my initial post in this specific thread where I gave those SEPP facts and my age at the outset. BTW- The custodian does not issue a 5329, it is something I have to add to my 1040 filing (or have in the past). My question was, can I just leave off the 5329 on my 2010 tax return, since both separate SEPP IRA withdrawal 1099-R’s for 2010 tax year (two different SEPP plans) are coded “7” this year, even though they are for SEPPS that had not been completed (in terms of five year clock) in 2010. You are not commenting on my issue. I read the instructions for form 5329, and it appears that I do not have to file it this year for 2010 tax year. I was just looking for some agreement amongst the commentators. KEN2011-01-27 17:21, By: Ken, IP: [126.96.36.199]
L6: different 5329 questionKen:
Your assumption is correct.
In the past you filed Form 5329when yourForm 1099-Rwas coded “1” and you needed to claim the “Exception” because of your active SEPP Plan. Since you are older than 59 1/2 and you are receiving Form 1099-R with “Code 7” which indicates “Normal Distribution,” then you do not need to file Form 5329. There’s nothing to change from what was reported on Form 1099-R.
Eventhough the coding has changed, you still need to complete all SEPP Plan requirements as it relates to the 5-year rule. But there is no”reporting” that you are waiting for the 5-year period to complete. Just make sure you follow the rules until you have satisfied this rule, and document, document and then document.
Jim2011-01-27 19:36, By: Jim, IP: [188.8.131.52]
L7: different 5329 questionThanks Jim. That is what I thought. KEN2011-01-27 21:42, By: Ken, IP: [184.108.40.206]
L8: different 5329 questionI also concur.
In addition, you can see that the 5329 (Part I)is solely designed to either report an early distribution or claim an exception to a Code 1 on the 1099R. Therefore, if the correct code is 7 (post 59.5), it should not be changed UNLESS you want to report your SEPP as busted.
In other words, do not use the Form to change a 7 to an “02” exception.
2011-01-28 02:45, By: Alan S., IP: [220.127.116.11]
L9: different 5329 questionThanks Alan. I value your wisdom and the enormous amount of time you spend helping people on this and other sites. KEN2011-01-28 15:49, By: Ken, IP: [18.104.22.168]