My distribution is off $0.04, should I correct it?
L1: My distribution is off $0.04, should I correct it?I take 72T distributions from an IRA that has been going on for 5 years. This year, due to a typo I think, the distribution is $0.04 too low. The total yearly distribution is about $25,000.There is still time to correct it but is it necessary? I’m not sure the company will want to send me a check for $0.04.I wonder if it will get flagged by some type of IRS computer matching checkup.What should I do?Thanks2009-10-28 20:30, By: Harry, IP: [22.214.171.124]
L2: My distribution is off $0.04, should I correct it?At 4 cents, you have no problem. Generally anything within about 50 cents is ok.I believe it iscalled “Close Enough For Government Work!”2009-10-28 20:41, By: Gfw, IP: [126.96.36.199]
L2: My distribution is off $0.04, should I correct it?Harry:This should not be a problem. After dealing with the IRS for many years, they have never raised a question about us rounding our tax figures to the nearest dollar. If an amount is less than $0.50, for example, we round it down to the next lower whole dollar amount. If it is $0.50 or more, we round up to the next higher dollar amount. This is defensible mathematically and works out to an even split of higher and lower rounding. Your 72t distribution should be fine, even with this tiny error. It’s good that you are watching this carefully, though. It really pays to pay attention to such details and not let them slide out of control.2009-10-29 17:39, By: Ed_B, IP: [188.8.131.52]