Fixing Busted 72t
L1: Fixing Busted 72tI am 60 and have been making monthly SEPP withdrawals from my IRA for three years. While doing my 2009 taxes I noticed my custodian had changed the withdrawal code on my 1099 from 2 to 7 to reflect the part of the year that my monthly withdrawals were after I had turned 59 1/2. In March of this year I withdrew an extra (small) amount, incorrectly thinking that I was free to withdraw as desired since I was over 59 1/2. Reading some of the posts (Confused 2/9/10 re: Alan S) it seems to me that I should be able to contact my custodian and change to an annual withdrawal schedule and as long as 2010 withdrawals do not exceed the previous annual amounts, I would be o.k. Yes?
Thanks to all, great site and info.2010-04-28 16:46, By: Zoomer, IP: [220.127.116.11]
L2: Fixing Busted 72tYES. The only requirement is that each calendar year you withdraw the same exact amount. The frequency amd amounts of the distributions during any year are immaterial. Only the annual total matters.By the way, you might want to contact your custodian to suggest that theyread and understandthe regulations. If you tell us which company it was, we’ll know if we have to be on the lookout.2010-04-28 17:26, By: dlzallestaxes, IP: [18.104.22.168]
L3: Fixing Busted 72tThe split 1099R coding is correct since withdrawals after 59.5 should be coded 7 (Normal) unless the custodian determines that you busted your plan and then they would code everything with a “1”. This is per the 1099R Instructions.But don’t confuse this coding with the end of your plan. Your modification date remains the longer of age 59.5 or 5 years from your first distribution date. Therefore, you are still bound to your plan until you reach the 5 years, but from now on the coding should be 7. Do not file a 5329 to change the 7 to a 2. While harmless, the 2 code is not technically correct after 59.5 unless they incorrectly first gave you a 1 code. I know this is confusing, particularly since IRA custodians are not consistent in following the IRS coding guidelines.2010-04-28 21:00, By: Alan S., IP: [22.214.171.124]