IRA Levy from IRS
Taxpayer owes $140K to IRS, we have asked the IRS to levy the taxpayer’s IRA to pay for the liability. Although the amount will be considered a distribution and taxable, can we escape the 10% penalty since we are satisfying an IRS tax lien?
Permalink Submitted by Alan - IRA critic on Fri, 2020-02-21 18:26
Yes, there is a penalty waiver for an IRS levy. The 1099R will be coded 2 which indicates a penalty exception applies.