Taking money out of IRA in the same year after plan ends
L1: Taking money out of IRA in the same year after plan endsAll – always good info on this website.
My plan (in a Fidelity IRA) ended July 2014 when I turned 59.5 which was the longer of 5 years (plan started 5/2009). Last distribution was July 2014. I have not taken anything out since then.
This month, I would like to take out some money to spend for the rest of the year. The amount will be different than my monthly plan amount. Will this cause a problem to the IRS when Fidelity reports it? Anything special for me to do with Fidelity or the IRS? Thanks. Fran
Fran2014-11-13 20:03, By: Fran, IP: [22.214.171.124]
L2: Taking money out of IRA in the same year after plan endsAssuming that you everything was in compliance when your plan ended, this will not pose any danger for the plan, but it may increase the chance of having to respond to an IRS inquiry given that the general familiarity with 72t plans at the IRS is not real good.
You will get a separate 1099R coded 7 for the current distribution. Having one for the amount of your 72t distribution and another for the current distribution does provide some clarity as it shows that you reached 59.5 before taking the current distribution and the custodian thinks your plan ended or they would combine all distributions on a 1099R coded 1. You have probably been filing a 5329 to claim the 72t exception in the past and for 2014 you will file it only for the 72t portion of the distributions.
There is nothing special to do except to be sure to file a correct tax return. Obviously, your taxable income for the year will be increased as a result of the current distribution.2014-11-14 01:55, By: Alan S, IP: [126.96.36.199]
L3: Taking money out of IRA in the same year after plan endsThere is always a possibility that the custodian might not issue 2 separate 1099-R forms, and combine all of the distributions on a single 1099-R, which could require correspondence with the IRS to resolve the issue. As Alan said, the IRS does not have the best record in understanding SEPP 72-T regulations.2014-11-14 13:50, By: dlzallestaxes, IP: [188.8.131.52]