5 replies to this topic

[Terry D]

I have a client who is disabled and has reached the age of 59 1/2. Client DOB: 3/29/1952. Client claims she took distribution from a retirement plan after she reached 59 1/2 years old. She gave me two 1099R forms. One form has code 7 normal distribution and the other has code 1. This is Fidelity and I have seen them screw these things up in the past. Because of the coding, there is a 3k+ balance due to the Feds. Can any of the exceptions apply here? My first response is to as the client if she can show or prove the date she took the distribution and that date should be after 9/29/2011. If she can, how do we proceed? My thoughts are to ask Fidelity to reissue the 1099R with the correct coding. I looked at the 5329 form to see if any of the exceptions may apply but am too tired to think. Any help is appreciated

[Lion]

Page 3 has the exceptions and code numbers to use:

http://www.irs.gov/p...s-pdf/i5329.pdf

[NECPA]

Terry, Is she totally and permanently disabled? You wouldn't need to worry about the date then.

[Terry D]

She does receive SS disability benefits which is her only source of income. With that said, I think you are correct. I will ask her about the disability to be sure.

[joanmcq]

yes, because if she took it out a day before 59.5, it's a code 1.

[SCL]

i have had ONE (recent) experience with this type of situation...apart from the disability aspect (?) that may save this taxpayer.

from prior discussion on this board and after the fact , i now understand this:

the taxpayer initiated an ira withdrawal one or a few days before turning 59 1/2. the check (distribution) was received after 59 1/2. "CONSTRUCTIVE RECEIPT" establishes the distribution date before 59 1/2 (like a stock sale trade date). the local prudential insurance company broker/agent who filed the paperwork did not know about "constructive receipt"...the national prudential tax/ accounting department did know about "constructive receipt" and issued a code 1 distribution.