 6% excise tax on ineligible rollover, Where int he code |
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 Dec 8 2008, 08:32 PM
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#1
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Registered User Group: Registered Posts: 533 Joined: 23-May 06 Member No.: 16,240  |
Can someone point me to the code section that says you are subject to a 6% excise tax for an ineligible rollover?
(Participant rolled entire 401k account before RMD was taken, and I need to show someone that there is an excise tax if the amount is not removed) Thanks! This post has been edited by BG5150: Dec 8 2008, 08:34 PM -------------------- There are no stupid questions; there are only stupid people.
Two wrongs don't make a right, but three rights make a left. |
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Dec 8 2008, 08:41 PM
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#2
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Registered User Group: Registered Posts: 2,138 Joined: 23-July 06 Member No.: 16,532 |
QUOTE (BG5150 @ Dec 8 2008, 06:32 PM)  Can someone point me to the code section that says you are subject to a 6% excise tax for an ineligible rollover? (Participant rolled entire 401k account before RMD was taken, and I need to show someone that there is an excise tax if the amount is not removed) Thanks! IRC § 4973 -------------------- John Simmons
jsimmons@ida.net Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation. |
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| Guest_named_mjb_* |
Dec 8 2008, 11:54 PM
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#3
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QUOTE (BG5150 @ Dec 8 2008, 08:32 PM) Can someone point me to the code section that says you are subject to a 6% excise tax for an ineligible rollover? (Participant rolled entire 401k account before RMD was taken, and I need to show someone that there is an excise tax if the amount is not removed) Thanks! what is the excess amount? If the participant received his entire account balance before the MRD date how is that an excess contribution since the MRD is not due until either 12/31 or 4/1 of the year following the year in which age 70 1/2 is attained? See Reg 1.401(a)(9)-5 Q/A1(c). |
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Dec 9 2008, 08:46 AM
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#4
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Registered User Group: Registered Posts: 533 Joined: 23-May 06 Member No.: 16,240 |
QUOTE (mjb @ Dec 8 2008, 11:54 PM) QUOTE (BG5150 @ Dec 8 2008, 08:32 PM) Can someone point me to the code section that says you are subject to a 6% excise tax for an ineligible rollover? (Participant rolled entire 401k account before RMD was taken, and I need to show someone that there is an excise tax if the amount is not removed) Thanks! what is the excess amount? If the participant received his entire account balance before the MRD date how is that an excess contribution since the MRD is not due until either 12/31 or 4/1 of the year following the year in which age 70 1/2 is attained? See Reg 1.401(a)(9)-5 Q/A1(c). He didn't receive his balance; his IRA did. The amount due to the RMD is an ineligible rollover amount, so it needs to be pulled out. If it is not pulled out before the individuals tax filing date, I think there is a 6% excise tax on that amount (not sure about the earnings). I do believe there is no 50% excise tax since a correct 1099 will be issued from the plan, and the money did get removed (1.401(a)(9)-7 Q-1) -------------------- There are no stupid questions; there are only stupid people.
Two wrongs don't make a right, but three rights make a left. |
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