Tax Withholdings

You are here:
< Back

L1: Tax WithholdingsI started a SEPP last year taking a full year distribution in December with state and federal taxes withheld. I received 1st quarter check late February also with taxes withheld. Just received 2nd quarter check with no taxes withheld. I don’t believe this will bust the plan, however I want to avoid the hassle of paying quarterly taxes. My planned course of action is to return the check and have another issued with the withholdings for taxes. Is there a problem I am not seeing?2008-06-16 08:44, By: Padruig, IP: []
L2: Tax WithholdingsThe amount taken out of the IRA is what the IRS is watching for compliance with the SEPP 72t, based on total taken out for the year, so as long as gross amount is correct for this quarter, even if no taxes were withheld, there is no problem, other than nowowing the estimated tax payment in lieu of the withholding covering it. I, too have the taxes taken out when the (monthly) payments are made to avoid missing a Qtrly pmnt to Fed and State. I figure, why bother with trying to make a few bucks on the tax money while you hold it and have to remember to meet those payment deadlines. If the custodian will reissue that payment at net, I think that is a good solution. If not, send a Qtrly estimated payment to Fed (and state?) for this distribution, and insist that they fix it for next time and all future payments. I would also want an explanation from them of why they “fouled up” this payment. Keep a close eye on them! KEN2008-06-16 08:57, By: Ken, IP: []