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ByBear

L1: IRS FormsGentleman,
I wish to simplify my future relationship with the IRS.
1. If my SEPP disbursements in block 7 of form 1099-R are coded “2”, am I required to fill out form 5329?
2. How do I ensure that my trustee uses the correct code when reporting to the IRS?
3. Cana retiree use a short 1040 form, circumstances permitting, to claim retirement income?
Please advise.2006-02-05 06:43, By: Bear, IP: [69.19.14.20]

L2: IRS FormsHello Bear:
The answers:
1. No.
2. You can’t; however the instructions for 2005 are pretty clear that SEPP distributions should be coded with a “2” in box 7.
3. No.
TheBadger
wjstecker@wispertel.net
2006-02-05 08:56, By: TheBadger, IP: [66.250.23.25]

L2: IRS FormsTheBadger is right about the clarity of the IRS instructions concerning the proper coding of block 7 in form 1099-R. IRS Pub 575 p. 28 & 2005 Instructions for Forms 1099-R and 5498 are two references that come to mind.
However, I’m finding that mytrustee (a major brokerage house)is unwilling to takethe trouble/risk to ensure thatI meet the requirementsof IRC 72(t). My 1099-Rwill be coded with a 1 in block 7 (exemption unknown)and I will be filling out form 5329. This releives them of any involvement in the calculations and I’m on my own if audited by the IRS. The only information that is required by my trustee is the amount of money I need and the disbursement interval. I’m afraid that this practice will become more widespread unless the IRS requires code 2 when applicable. I know, I will be carefully documenting all SEPP calculations and corespondence.
Bear2006-02-07 16:00, By: Bear, IP: [69.19.14.16]

L2: IRS FormsBe careful what you ask for. If the IRS requires a code of 2′ on the 1099, get ready to pay fees to the Trustee/Custodian to administer the SEPP. They will probably want _

To determine what assumptions you can use probably very plain vanilla unless you have your own PLR that would allow things like annual re-calculation, etc.
All plan assumptions on file signed by you before the plan is implemented.
A form signed annually by you that you haven’t changed, modified the plan, made additional withdrawals, made additional deposits, etc..
To demand that they have all the funds allocated to the SEPP in their accounts for all years the SEPP is in existence.
And don”t forget, regardless of what requirements they want, you are still on your own if (or when) you get audited by the IRS.2006-02-07 16:21, By: Gfw, IP: [172.16.1.74]

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