Small rollover contribution after beginning of SEPP
L1: Small rollover contribution after beginning of SEPPSEPP started 1/9/2015, DOB 6/22/1961, using amortization method
Retired in early 2014, and rolled over entire 401k into this IRA in mid-2014.
Began SEPP in January 2015, but company made a final 401k contribution of $39 in mid-2015, and it was automatically rolled into the SEPP IRA.
Fidelity holds both 401k and IRA, and have reported the contribution as a rollover on the 2015 form 5498.
Did this break the SEPP? If so, penalty on prior distributions would add up to about $4000, so not really worth getting a PLR. Could it be ignored as an insignificant portion of the IRA?
2016-01-25 18:12, By: sargentman, IP: [220.127.116.11]
L2: Small rollover contribution after beginning of SEPPYes, I would ignore it. Should the IRS contact you regarding the 5498 reported rollover being disallowed, there are several IRS letter rulings under the general grouping of”executor errors” that have saved 72t plans from modification.So called “trailing dividends” have also been exempted when the 72t planis set upfrom the account in which the payment has been made.The amount of delay in this final payment has arisen from either an error or late trailing dividends.
I agree it is not worth the money or time to seek your own PLR in this situation. Just retain the documentation so you can show how, why and when this deposit was made.
In most of these situations, a direct rollover check is mailed to the participant to forward to the IRA custodian, so it is somewhat surprising that you did not receive the supplemental check. If you had you could have intercepted it, returned it and requested a simple distribution check made out to you personally. So keep this fact in mind as well if the IRS should ever contact you about this. I doubt that it will even come to that.2016-01-26 01:25, By: Alan S, IP: [18.104.22.168]
L3: Small rollover contribution after beginning of SEPPThanks Alan! I actually received a letter from my company stating that they would send me a check unless I directed otherwise, so I was surprised to see it get rolled over.
I notified Fidelity of this, and they stated that their standard procedure is to roll over funds and were unaware of any other directive from the company. This was in October, a few months after it happened, and they said it was too late to change anything.
I also reminded them that I’m on a 72T plan, and they initially said it would be OK; however, after escalating it to their tax department they came back and said it may have broken the plan after all.
Thanks again! I’ll be sure and keep my documentation together in case this comes back to me.2016-01-26 01:49, By: sargentman, IP: [22.214.171.124]
L4: Small rollover contribution after beginning of SEPPFidelity sent you a letter that they would be sending you a check unless you directed otherwise, and then they rolled over the payment regardless.
I would write that you are putting them on notice that you will hold Fidelity responsible for any additional taxes, penalty, and interest if the IRS rules that you in effect busted your plan because they did not follow their own letter. I would send it certified mail, return receipt.2016-01-26 06:25, By: dlzallestaxes, IP: [126.96.36.199]