Probable bust

You are here:
< Back

L1: Probable bustStarted a 72T in 2006 (first year of withdrawls, 4 yrs in at this point). Was taking $13,553.00 out in 4 quarterly payments. Each quarter, I’d go to see my CFP to make withdrawl request in person(good reason to have a contact/visit…). Will be 58 in Feb. Everything rocking along just fine, til I got my 1099 for 2009,last Friday. Had what looked to be total for 3 withdrawls, line 7,coded at 2, and one “regular” withdrawl, at coded 1. Got mad…thought custodian had messed up on the 1099, was going torequest a corrected one. As it was end of the week, went back over my copies of withdrawl requests. Found that my CFP had missed entered the Sept. withdrawl at $13,353.00 (put a 3 where it needed a 5). I missed it at that time. He did the same for Dec., again we didn’t catch it (too many 3’s and 5’sin right places to notice….) Last withdrawl was 15Dec09. less than 60 days from today… So, wound up $400 short on withdrawls for 2009. Don’t know if this is reason the codes were different, perhaps, but not sure whyamounts were split coded like they were (odd one, coded 1, was for the correct amt…others were rolled into a total, coded 2…). Don’t really think that matters at this point.Even though I’d like to “blame” others, really was my error not to notice,when I signed those withdrawls… There was just no audit/backup from custodian prior to seeing the 1099 on this end, in Jan, of course.Will not be able to chat with CFP or custodian til end of the next week. Trying to understand what options are available. Wantto avoid penalty/interest if possible, or mitigate as much as possible.Questions:1. Have I truly busted the plan? 2. What is next best action?3. Is there any hope that I can modify the plan within 60 days of last withdrawl, to adjust to a 400 dollar withdrawl rate than previous…yet salvage the plan? (think 4 yr might be the issue…and am using a pretty sporty interest rate, as it was set up in 2006….)4. If I must go back and come up with 4 yrs worth of 10% penalties, and interest (for 09 only?), this will be afair amount….what is best: to take enough out in 2010 to make penalities and “live” to 59 1/2, and just cancel the plan in 2010? (can I do that, or do I have to go till 59.5, 5yrs doesn’t get me to the age…)Of course I will chat with principles first, but think I may have really stepped into it, and wanted to get some advice, if time was sensative… My experience has been that 72T’s are not well known/understood in my group of resources….so hoping to get some direction.Just seems like a pretty weighty penalty to pay for a simple error in data entry…no mischief was intended, taxes were paid at each withdrawl, etc….?????Thanks..2010-01-24 23:18, By: Mac, IP: []
L2: Probable bustI think that the subject should be “Very Probable Bust”I hope that someone can give you a few better comments and I’m sure that there will be other replies, but…You are within the 60 days, but unfortunately the 60 days rule works for putting money back, not for taking additional amounts out. You could claim administrative error and file for a PLR (about $9k plus the professional fees), but there is documentation that you received exactly what you asked for. In terms of the 10% penalty, distributions made in 2006, 2007, 2008 & 2009. Interest penalty, the interest will be calculatedon the 10% due and unpaid for 2006, 2007 & 2008. In terms of your numbered questions, I hope someone has better answers, but let’s start with…#1. Yes. #2. Find competent tax counsel, not your CFP. #3. Answer above. #4. Answer above.This sounds like a lesson in making sure that you watch the plan and that you shouldn’t depend on someone else to make sure that it is right – they will say that they are sorry, but you will pay the penalties and interest. 2010-01-25 00:13, By: Gfw, IP: []