72(t) SEPP mistake – 13 pmts recvd – trustee change
A client moved his account (active under 72(t)) from Firm A to Firm B. When re-establishing the monthly payout date, an error caused 13 distributions to be recieved by the client in tax year 2009. Any guidance on how the client should handle this error caught in a relative timely manner? Are there PLRulings that have the same or very simular sets of fact that the clients tax advisor can review for guidance?
Permalink Submitted by Alan Spross on Mon, 2010-03-22 18:42
Attached is a general article on “error correction rulings”. I have not located a specific one on excess payments, as most of them seem to address insufficient payments. Some of those are 2008 40054 and 2008 35033. The instructions to the custodians will be important to determine in this case if there is custodian error or client error. Any client contribution to the error would hurt his chances.
http://72t.net/Articles/ArticleShow.aspx?WA=870e2089-7523-49e3-8252-b2e2…
Note that the client could have rolled the December distribution back to the account within 60 days and avoided this issue, that is unless he did not use a direct transfer to change custodians and therefore had used up his one rollover in 12 months. If I can locate a PLR involving an extra distribution, will post it later.