accidental IRA distribution

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Subject Author Date accidental IRA distribution wrighttb 11-28-2006  Re: accidental IRA distribution Stuart A. Bronstein 11-28-2006  Re: accidental IRA distribution Drew Edmundson 11-28-2006
Posted by wrighttb on November 28, 2006, 1:03 am Please log in for more thread options Ouch! I had 50K shares of a restricted (but legend has been lifted) stock in a Merrill IRA. I tried to transfer the shares to a different IRA with a different vendor. I then closed/canceled the Merrill account because there was nothing left there. Unfortunately, the "new" IRA vendor did not accept resctricted shares and they sent them back to Merrill a few days later. Merrill then sent me a certificate (at least I assume it was Merrill...someone did) for the 50K shares which was misunderstood/misplaced/whatever. This was all done in late April 2006. Unfortunately, I've only today (November 2006) figured out what the hell transpired and unbeknownst to me i've taken a distribution from the IRA! I "found" the stock cert today. I obviuosly have not used the proceeds from the so-called distribution, and i most certainly did not intend to take one. It is my responsiblity in the end (should have paid more attention to what was happening with my accounts) but I was not clued in to what was happening all that clearly either. I stopped listening to all the bad news from my tax man part way through his speech and poked around a bit on the Internet. There is a "non-automatic waiver application" to have the IRS consider waiving the 60-day rule via a "private letter ruling:". My question is whether ANYONE has ANY experience with this mechanism such that I can determine either that I shouldn't bother with the process or whether it's worth giving it a try. Very easy to show that I have not profited by the unintended distribution. Not a cheat, just too busy, a dumbass, whatever. Thanks! << ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >> Posted by Stuart A. Bronstein on November 28, 2006, 9:03 pm Please log in for more thread options wrighttb@msn.com wrote: > I stopped listening to all the bad news from my tax man part > way through his speech and poked around a bit on the > Internet. There is a "non-automatic waiver application" to > have the IRS consider waiving the 60-day rule via a "private > letter ruling:". My question is whether ANYONE has ANY > experience with this mechanism such that I can determine > either that I shouldn't bother with the process or whether > it's worth giving it a try. Very easy to show that I have > not profited by the unintended distribution. Not a cheat, > just too busy, a dumbass, whatever. In my experience a private letter ruling is available if you convince the IRS that, based on the law, court cases and other IRS rulings, you are entitled to the relief you are asking for. I haven't seen them given for merely equitable reasons. The cost of obtaining a letter ruling is not small. The IRS inposes a fee (as I recall around $2500 the last time I checked). And you should have a tax lawyer submit the request, because the justification should be in the form of a legal brief listing all the relevant law and why it applies. There may be a kind of application for unintentional and hardship cases, but I doubt that a letter ruling is the way to do it. Stu << ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >> Posted by Drew Edmundson on November 28, 2006, 9:03 pm Please log in for more thread options righttb@msn.com wrote: > Ouch! I had 50K shares of a restricted (but legend has been > lifted) stock in a Merrill IRA. I tried to transfer the > shares to a different IRA with a different vendor. I then > closed/canceled the Merrill account because there was > nothing left there. Unfortunately, the "new" IRA vendor did > not accept resctricted shares and they sent them back to > Merrill a few days later. Merrill then sent me a > certificate (at least I assume it was Merrill...someone did) > for the 50K shares which was > misunderstood/misplaced/whatever. This was all done in late > April 2006. > > Unfortunately, I've only today (November 2006) figured out > what the hell transpired and unbeknownst to me i've taken a > distribution from the IRA! I "found" the stock cert today. > I obviuosly have not used the proceeds from the so-called > distribution, and i most certainly did not intend to take > one. It is my responsiblity in the end (should have paid > more attention to what was happening with my accounts) but I > was not clued in to what was happening all that clearly > either. > > I stopped listening to all the bad news from my tax man part > way through his speech and poked around a bit on the > Internet. There is a "non-automatic waiver application" to > have the IRS consider waiving the 60-day rule via a "private > letter ruling:". My question is whether ANYONE has ANY > experience with this mechanism such that I can determine > either that I shouldn't bother with the process or whether > it's worth giving it a try. Very easy to show that I have > not profited by the unintended distribution. Not a cheat, > just too busy, a dumbass, whatever. Take a look at the published private letter rulings and see how your circumstances compare. Try Legalbitstream for the PLRs: http://www.legalbitstream.com/ The actual Code section for the waiver of the 60 day rule is 408(d)(3)(I). --- Drew Edmundson, CPA Cary, NC << ======================================================= >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2006) - All rights reserved. >> << ======================================================= >> Similar Threads Posted 72T Distribution July 1, 2009, 10:42 pm Massachusetts IRA distribution March 6, 2007, 5:44 am Partnership Distribution - Not on K-1 October 8, 2007, 6:43 pm Re: Partnership Distribution - Not on K-1 October 9, 2007, 8:28 pm Early distribution from an IRA April 20, 2008, 10:23 am Nondividend Distribution February 14, 2009, 4:08 pm IRA distribution in shares of stock. 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