72t 1099

Submitted by Scott Lojewski on Wed, 2018-12-05 20:19

I am currently doing the 72t program and noticed that box 7 on my 1099 form NFS/Securities America has a 1 not at 2 I called NFS who told me to call Securities of America and they said after looking into it that the reply was “It is up to the client to declare that it is a 72T distribution on their taxes” dose that sound correct, I did tell the H&R Rep I was doing the 72T program there is a box that has been checked with an X IRA/SEP Simple in box 7 as well as 1 on the 1099. I do see where they did take out 10% on my taxes I will have to get with H&R Block I have done my taxes for the last 30 years and have had no problem and now I hire someone and have to back track.



Submitted by Alan - IRA critic on Thu, 2018-12-06 03:44

  • This is what almost all of the IRA custodians are doing these days. They do not feel capable of fully “underwriting” the accuracy of SEPP calculations and distributions and therefore code the 1099R with Code 1. The IRA owner then must file Form 5329 and enter exception code 02 on the form. The IRS is used to getting these 5329 forms, and they are easy to complete.
  • 10% is the default withholding % for any IRA distribution, so if you want a higher % or want to decline withholding you can do that. Of course, the amount withheld counts are part of your SEPP distribution.

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