Trouble in retirement paradise

L1: Trouble in retirement paradiseSituation: my “friend” age 56 retired last year and began withdrawing funds based on a calculation using the Required Minimum Distribution Method.
Year ends, return is filed. Life is good.
Months later, friend returns to visit and indicates that he took out and rounded up the required minimum distribution. Let’s say distribution should have been 29,698.61 and he took out 32,000.00 .
I understand that often times taxpayers have a one time chance to switch to the Required Minimum Distribution Method, but my “friend” is already using that method.
Are there any options here? I am not an expert in this area, but it seems to me that friend has blown his 72T election right at the gate. OR? is he okay if he pays the tax on the excess and continues to calculate and withdraw an exact amount from the Minimum Distribution Method?
I don’t believe so, but perhaps I have the wrong slant on this.
Thank you for your help.
2013-11-21 21:17, By: OHOO, IP: [75.144.135.189]

L2: Trouble in retirement paradiseYour friend has probably busted his plan.
$2,300 isn’t a rounding error. He really needed to take $29,698.61. Sounds like he proceeded without checking what heshould have done.2013-11-21 21:48, By: Gfw, IP: [205.178.51.82]

L3: Trouble in retirement paradisewhat is the IRS position on rounding to nearest whole dollar?
would there be a problem if he took 29699? most other calculators out
there round, and in the IRS documentation, the examples in their calculations
are always represented in whole dollars, no cents.2013-11-22 21:04, By: mjh, IP: [71.55.121.28]

L4: Trouble in retirement paradiseObviously rounding up or down to the nearest whole dollar is fine. But if he rounded to $ 30,000 then this extra $ 301 busted his plan. He should cut his loses, and terminate his plan, and pay the 10% early distribution penalty. Then start a new plan.
I do not know how far back he can go with adjusting his plan. If allowable, maybe he could retroactively terminate his plan after the first distribution, pay the 10% penalty on that distribution, and maybe he could be allowed to start a new plan against which he has taken the rest of the distributions to date, and modify his Dec distribution.
Also, is there any provision in the regs for him to repay any excess distribution within the same calendar year, and avoid busting the plan ?
Just trying to think outside the box, but within the regulations.
I just re-read the original posting, and my ideas won’t work because the situation involved 2012, not 2013. For future reference, however, would these be ok if it was in the current year ?2013-11-22 22:39, By: dlzallestaxes, IP: [98.111.191.220]

L5: Trouble in retirement paradiseSince this person worked in the job he retired from after age 55 then can’t he just claim the withdrawl that first year was not an SEPP but just a regular withdrawal? If you retire in the year you turn 55 you are supposed to do whatever you like without worrying about the 10% penalty.2013-12-25 16:07, By: Wannabe Retired, IP: [74.205.150.181]

L6: Trouble in retirement paradiseGood point — If he was withdrawing the funds from a 401-k or 403-B. But not if he made the withdrawals from an IRA, even if he had rolled over the funds from a 401-K to an IRA, because the rollover would have terminated the 401-k provisions.2013-12-25 18:46, By: dlzallestaxes, IP: [98.111.191.220]