Forgot to take my 2009 SEPP payment

L1: Forgot to take my 2009 SEPP paymentI am 53 years old and have been taking an equal payment from my IRA SEPP since 2000. I forgot to take it for 2009 but, have taken it in all past years. I took the payment for 2010 in January. I did not notice this untill I started to do my income tax and there was no 1099R. Can I take a make up distribution for 2009 in 2010?2010-03-06 01:46, By: Sonray, IP: [66.141.234.112]
L2: Forgot to take my 2009 SEPP paymentSimple answer is NO. It looks like you have a bigproblem at this point, and will owe 10% penalty on all prior withdrawals, along with interest charges on most of them. Skipping a year is not allowed during a SEPP plan. Ken2010-03-06 02:51, By: Ken, IP: [71.192.120.143]

L3: Forgot to take my 2009 SEPP paymentKen, Thanks for the reply. I feared it might be as you stated. Are the interest charges on the 10% penalty amount or the total amount withdrawn? I have been drawing for 8 years so this is bad news. Any chance for a Private Letter Ruling from IRS.2010-03-06 03:05, By: Sonray, IP: [66.141.234.112]

L4: Forgot to take my 2009 SEPP paymentI’ll let someone with more knowledge comment on the latest questions. I have seen PLR’s costing in the $10,000 range or more in some postings, with the recent hike in the filing fee alone, so you would have to figure out the penalty vs. the cost of hoping to get it removed. This problem you reference is why I prefer automatic SEPP payments vs. remembering to initiate them on my own each year. KEN2010-03-06 03:53, By: Ken, IP: [71.192.120.143]

L5: Forgot to take my 2009 SEPP paymentI suggest having a tax professional contact the TAXPAYER ADVOCACY SERVICE on your behalf using a form 2848 IRS POWER OF ATTORNEY to explain the situation. TAS as the powerto override IRS penalties in special circumstances under a provision called “equitable resolution”.I know practitioners who have had success in getting a waiver of the 50% penalty for failure to take the Required Minimum Distribution after age 70 1/2, either the first time, after an illness, etc., provided the distribution was taken as soon as the oversight was realized.2010-03-06 04:16, By: dlzallestaxes, IP: [173.49.30.37]

L6: Forgot to take my 2009 SEPP paymentThanks dllzallestaxes,I called the Tax Attorney that helped me set this up and left him a message today.2010-03-06 04:35, By: Sonray, IP: [66.141.234.112]

L5: Forgot to take my 2009 SEPP paymentI had automatic payments set up initially and then stopped them. Boy was that a mistake!2010-03-06 04:26, By: Sonray, IP: [66.141.234.112]

L6: Forgot to take my 2009 SEPP paymentIt would be extremely unlikely that your 72t distribution started 10 years ago still meets your needs or will meet your needs for another 6 years. This is underscored by the fact that you forgot to take the distribution which would not have happened if you needed the money.Thisshould be a major factor in determining whether to file for a PLR or not. If you file, a main point in the request would be that you self reported the error and took the 2009 distribution as soon as you discovered the oversight. But $10,000 plus legal costs is a high price to pay for a long shot if saving the current plan has limited benefits. Should you decide that you need a new plan anyway, AND the new plan would have a lower distribution as suggested by your overlooking the 2009 distribution, you can roll back the January distribution within 60 days of receipt and start over. If the new plan would have a HIGHER distribution, then there is no need to roll the current distribution back as it would just be the first payment for your new 2010 SEPP plan. This is probably a tough decision, but if the 60 day rollover can benefit you, best to be aware of when that 60 days expires. It could save you penalties on the recent distribution and end your penalty with the 2008 distributions.Don’t suppose you thought that the 2009 RMD waiver extended to SEPP plans, did you? It doesn’t, but there are probably some out there that thought it did and busted their plans due to that impression.2010-03-06 19:03, By: Alan S., IP: [24.116.165.60]

L7: Forgot to take my 2009 SEPP paymentAlan’s last point could be accepted by the IRS for waiving the penalty, especially if you reported the distribution on your 2009 return as if it had been made before 12/31.2010-03-06 19:48, By: dlzallestaxes, IP: [173.49.30.37]

L8: Forgot to take my 2009 SEPP paymentHeard from TAS today and they advised due to the depressed economic conditions for 2009 only, we are not required to take an RMD from our IRA or defined contribution retirement plan. She assured me this applied to SEPP IRA’s regardless of age. Forms 5329, 575 and 590.2010-03-27 00:33, By: Sonray, IP: [68.95.77.183]

L9: Forgot to take my 2009 SEPP paymentSorry… you received some very bad advice. If you missed, or did not take the true 2009 distribution, you busted the SEPP. If you have it in writing from TAS, you may try to get the penalties paid by TAS.BTW… Who is TAS?2010-03-27 01:13, By: Gfw, IP: [24.148.10.164]

L10: Forgot to take my 2009 SEPP paymentTAS is the TAXPAYER ADVOCACY SERVICE, under the direction of NINA OLSON, NATIONAL IRS TAXPAYER ADVOCATE. She, and her agency, are watchdogs over the IRS operations, and correct errors made by IRS in administering or interpreting the tax laws, without having to go to Tax Court. TAS resolves issues within 30 days, after the IRS or the PPS ( PRACTITIONER PRIORITY SERVICE) are unable to get an issue resolved.I have a direct line to TAS, and to Nina herself, having brought several national issues to her attention directly. Nina Olson is REQUIRED to report to Congress twice a year on her observations as to problems that the IRS is having in doing its job.While I have not seen any discussions that specifically indicate that SEPP 72-T distributions were also suspended during 2009, I will send her, and the Taxpayer Advocacy Panel (where I also have a contact), an e-mail to see if their was any ruling, and if not, if they would see if these too were suspended.2010-03-27 02:31, By: dlzallestaxes, IP: [173.49.30.37]

L9: Forgot to take my 2009 SEPP paymentBE CAREFUL. There is significant confusion between SEP-IRA (with 1 “P”) and SEPP (with 2 “P”s). Your posting about your response from TAS indicates an example of that confusion because you used the term “SEP-IRA”. If TAS understood your question in that way because you or whoever used that terminology, then you got the right answer to the wrong question. Further, the TAS response mentioned RMD ( Required Minimum Distributions) which is not the terminology for distributions from SEPP plans.You should recontact TAS ( hopefully the same person if you got his/her name and number), and clarify that you are asking about SEPP (“SUBSTANTIALLY EQUAL PERIODIC PAYMENT PLANS) that are exceptions to the 10% penalty for early distributions before 59 1/2 from IRAs and retirement plans. If he/she still states that these plans were also suspended in 2009, then try to get it in writing from her.2010-03-27 03:00, By: dlzallestaxes, IP: [173.49.30.37]

L10: Forgot to take my 2009 SEPP payment

13a. Please describe the tax problem you are experiencing

(If more space is needed, attach additional sheets.)

“I inadvertently failed to take my annual distribution from my IRA SEPP for 2009. My SEPP started in 2000 and all annual SEPP’s have been taken each year until 2009. Upon discovering the error I immediately took the distribution on January 6, 2010.”

13b. Please describe the relief/assistance you are requesting

(If more space is needed, attach additional sheets.)
“Please allow the January 6, 2010 distribution I took to be considered as a “make up” distribution of the 2009 distribution in order to preserve the stream of equal periodic payments. Please conclude that this “make up” distribution will not result in a modification to a series of substantially equal periodic payments I am currently receiving under Code section 72(t)(4). We request that this “make up” distribution will not result in the imposition of the 10 percent additional tax under Code section 72(t)(1) nor will it result in any interest liability. This will result in my 2010 1099-R reporting $xxxxx instead of $xxxxxxx.”This is the exact wording sent to TAS on the 911 form. To which she responded leaving her name and phone number for me. She is also mailing the information on which she is relying. She also said that the instructions will not address the SEPP however it is included in the exception.Please advise as to where the language specifing that SEPP’s are not included in the exemption of the Recovery Act can be found.Thanks for your posts and help. This is a great forum.2010-03-27 14:34, By: Sonray, IP: [24.148.10.164]

L11: Forgot to take my 2009 SEPP paymentUnfortunately SEPP plans were not included in the exception. However,I would love to see what she returns as documentation.This link may help… http://www.irs.gov/retirement/article/0,,id=96989,00.html#13and this one… http://www.irs.gov/publications/p590/ch01.html#en_US_publink10002307242010-03-27 14:48, By: Gfw, IP: [24.148.10.164]

L12: Forgot to take my 2009 SEPP paymentHere is a link to IRS Notice 2009-82. Scroll down to Q & A #9 for the documentation:http://www.irs.gov/pub/irs-drop/n-09-82.pdfNina needs to do some training………….2010-03-27 22:44, By: Alan S., IP: [24.116.165.60]

L13: Forgot to take my 2009 SEPP paymentThanks guys..I think!! LOL Looks like this is to be continued…. I will post again after communicating with TAS.2010-03-29 13:22, By: Sonray, IP: [68.95.77.183]