Returning Excess Distribution from IRA – PLR?
I have a client who received excess distribution above his RMD from his IRA custodian in 2008 due to an error duplicating monthly distributions; one to a checking account and one to his revocable trust. Client’s intention was to satisfy his RMD as he still works and earns significant income ($200k+) annually. The duplication was caught late in 2008 and therefore some funds were rolled back into the IRA using 60 day rollover and remaining distributions were cancelled. The net excess distribution of $28,000 was not the clients intention nor does he feel his fault.
My questions: Is anyone aware of past PLR’s that address this issue and what was the outcome? Was the client able to replace the excess distribution? Who could help prepare the PLR and at what cost? What time frame did the process take?
I appreciate any feedback.
Thank you,
Permalink Submitted by Bruce Steiner on Thu, 2009-06-25 02:41
There have been hundreds of private letter rulings seeking waivers of the 60-day deadline. I have obtained several of them.
I am not aware of any rulings directly on point, but you could search the rulings and see if you can find anything similar. Ruling requests are generally prepared by lawyers, though accountants and enrolled agents are permitted to do so, and taxpayers are permitted to prepare their own ruling requests. The IRS user fee is $3,000, and the legal fees would likely be more than that. Your client would have to consider whether it’s worth the effort where the amount involved is only $28,000, and there’s some uncertainty as to the result. I think it might help increase the chance of success if someone at the financial institution would be willing to admit that it was their error.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL