Penalty ?

L1: Penalty ?I started a SEPP in July 2003 – and withdrew $3k per month for 4 months (approx 36k per year) before I realized that I didn’t have enough cash on hand. I busted the original plan, and started a new one effective Nov. 1st. I also withdrew a lump sum of $20k when I stopped the original plan. My question: Since I was and still am eligible to withdraw $36k per year, can I add the $20k lump sum, the $12k that I took monthly from the 1st plan, and the $6k for Nov/Dec from the 2nd plan – and reduce my penalty to only the $2000 over withdrawal for 2003 ??? Or am I stuck with the penalty on the $32,000 that I withdrew prior to startingmy new plan ?
Thanks.2003-11-17 11:29, By: Anne, IP: [127.0.0.1]

L2: Penalty ?Hello Anne:
You don’t give us enough information to figure all of this out. We need you age in 2003, dates of all distributions, and the highest account balance from 12/31/02 to the day/month before the 1st distribution. Then we can figure all of this out.
TheBadger
wjstecker@wispertel.net
2003-11-17 14:52, By: TheBadger, IP: [127.0.0.1]

L2: Penalty ?I started a SEPP in Dec 2003. After receiving the first check I realized that a “misunderstanding” had occured and Fidelity had not used the correct beginning balance to compute my monthly withdrawal. They have told me they can stop the first SEPP and start a new one in Jan using the correct amount. Am I correct in assuming that I will owe a 10% penalty on the first withdrawal?
Thanks
Hank2003-12-04 12:25, By: Hank, IP: [127.0.0.1]

L2: Penalty ?Hello Hank:
Not unlike an earlier poster, you don”t provide enough detailed information to provide a difinitive answer. However, as a general answer, if you started your plan in 12/03 (essentially right now) & for whatever reason the, the distribution amount is wrong, simply correct it, again right now, by either taking an additional distribution or putting some money back. Then, no penalties will be due on the 12/03 distribution & hopefully you will get it all lined up correctly for 2004 & beyond.
As general comment, SEPP plans are always the responsibility of the taxpayer & are never the responsibility or duty of the trustee/custodian. As a result, the taxpayer should always advise the trustee, in writing, what they are to do; therefore, in this case, how could Fidelity have erred?
TheBadger
wjstecker@earthlink.net

2003-12-04 12:44, By: TheBadger, IP: [127.0.0.1]