end of 72t tax question

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L1: end of 72t tax questionThank you for all of your help through the years. I started mt SEPP in 2001 and ended it on 2/28/2010 when I reached age 59.5. My question is a tax filing one and I hope someone can help. I always reported my SEPP income on line 16b on 1040. Though my SEPP ended I continued distributions in 2010 and received two 1099’s as I had expected one a code 2 and one a code 7. Do I add these 2 together and report on 16b or do I report the code 7 ( normal distribution ) on line 15 and the SEPP distribution on 16B. Once again thank you for years of assistance .2011-02-05 16:23, By: ED, IP: []
L2: end of 72t tax questionSEPP 72-T is an IRA. IRA distributions are reported on line 15. 15a is the Gross Amount of the Distribution, and 15b is the taxable amount of the distribution. They are different figures only if you had made non-deductible contributions sometime in your lifetime.What made you think that the SEPP 72-T was a pension or annuity, which is what line 16a and 16b are used for ? You are lucky that IRS never sent you a notice about your “unreported” SEPP distributions which were reported to the IRS on form 1099-R, and IRS would have been looking for on line 15.2011-02-05 18:00, By: dlzallestaxes, IP: []

L3: end of 72t tax questionI have always done my taxes on my own but in 2001 when I started the SEPPI went to a independent tax preparer that was reccomended to me to make sure it was done right . That person put the info on 16b and I just followed doing it that way ever since. Thought I could sleep better now that SEPP was over but I guess not with this worry now. It would come out the same as I am paying taxes as ordinary income just was reported on wrong line. I asssume your reccomendation from this point on is to report on 15b as gross and taxable is the same. Thank you very much for the correction.2011-02-05 18:14, By: Ed, IP: []

L4: end of 72t tax questionIt would help if you confirmed whether these SEPP distributions were from an employer plan such as a 401k or from an IRA, or perhaps even a defined benefit pension.While they are rare, you CAN have a valid SEPP using a 401k plan. But line 15 is for IRAs only and line 16 for employer plans, annuities etc. Also, note that the difference between codes 2 and 7 only relates to your age and therefore whether an early distribution penalty would apply. It is nothing to do with the amount of taxable income. Therefore, you WOULD have the 1099R amounts together, but the line they go on depends on the type of plan issuing the distributions.If your SEPP was correctly handled OTHER than the line on the 1040, you should have no problems since the taxable income is the same and the plan could be valid (or not) regardless of the line you reported it on. In other words, if the only error is the line on your 1040, the worst that would happen is that you might have to provide the IRS with some documentation, nothing to lose sleep over.2011-02-05 20:01, By: Alan S., IP: []

L5: end of 72t tax questionThanks Allan. My SEPP was definately set up through my IRA. In 2000 I retired and rolled my 401k and my lump sum benefit into 2 separate and distinct IRAS. In 2001 I started a SEPP plan, with great help from this site, on the one IRA. This had run smoothly with no issues till my plan ended in 2/2010 at age 59.5. The only thing is that the accountant I used in 2001 when started SEPP put the distribution on line 16 and I followed that each subsequent year when I did my taxes myself. It looks like that was wrong and this should have been reported on line 15 all these years. I just questioned it this year because I received 2 1099″s this year one a code 2 for the first 2 months and code 7 the rest of the year as these were now normal no exception distributions.Iwill use line 15 this and all future years. I am hoping reason IRS never questionned it is because the distributions match my 1099r’s just reported on wrong line. Even though income and taxes are correct I dont need the IRS letter stress. Thanks again2011-02-05 21:23, By: ed, IP: []

L6: end of 72t tax questionBe thankful that your custodian coded the 1099-Rs correctly. You’ll see postings on this site where they just issued a single 1099-R in the year that someone became 59 1/2.2011-02-07 15:43, By: dlzallestaxes, IP: []