SEPP 72(t) - took out too much ($12)

[nomid1]

Somehow I withdrew $12 too much (1/10th of 1%) from one of my IRAs using 72(t) SEPP rule. Too late to change. First year to do this.

1. I could call it a non-SEPP early withdrawal this year and pay a penalty, start again next year.
2. Keep taking out same amount, $12 error each year
3. Use correct withdrawal for the next 4 years I plan to be under the plan.

I'm took out the max I can take out at the max interest rate (3.69%). And a couple of weeks too late to correct the error with the custodian...for those two withdrawals

I can call the IRS, but wondering what best plan of action beyond this.

 

[OldShooter]

Forget it happened. Do not wake sleeping bears.

 

[HI Bill]

Here's a Q&A partial response from 72tnet.com: "the excess of what is the correct distribution can be rolled back into the IRA if there has not been a prior rollover in the past 12 months (only one is allowed in a 12 month period). A 72t distribution cannot be rolled over, but amounts in excess of the proper distribution can be. If the larger distribution still falls short of the annual amount, then just keep it and reduce the remainder of the distributions so that the annual total is correct.
2014-01-08 00:28, By: Alan S, IP: [24.116.67.233]"

 

[zinger1457]

My understanding is that if you exceeded the allowed distribution amount when doing a 72t the IRS would penalize you on the entire amount distributed up to that point, not just the excess amount. If that's the case you will definitely want to correct the error ASAP.

 

[nomid1]

No error - had to understand methodogy

Somehow I withdrew $12 too much (1/10th of 1%) from one of my IRAs using 72(t) SEPP rule. Too late to change. First year to do this.

1. I could call it a non-SEPP early withdrawal this year and pay a penalty, start again next year.
2. Keep taking out same amount, $12 error each year
3. Use correct withdrawal for the next 4 years I plan to be under the plan.

I'm took out the max I can take out at the max interest rate (3.69%). And a couple of weeks too late to correct the error with the custodian...for those two withdrawals

I can call the IRS, but wondering what best plan of action beyond this.

I discovered no error. Spent a day looking through Account Balance methodology for withdrawals. Also, opened up a couple of dozen of Google Spreadsheet versions to find out what I did.


The methodology and balance were correct. Once I found out what I did, as I did have my #s documented.



I used an average of end of year balance and first withdrawal to get the calculated balance for calculating withdrawals. All good.