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Subject Author Date
bank error in minimum distribution - mvl_groups_user 01-30-2007
Posted by mvl_groups_user on January 30, 2007, 11:11 am
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 I noticed what appears to be an error in my bank's required
minimum distribution calculation.

I am a beneficiary where the former ira owner died before
the required beginning date.

I have been taking distributions based on the single life
expectancy minus x years formula. It appears that my bank
has been erroneously calculating single life expectancy anew
each year, resulting in 5-10% lower distributions than my
true RMD in year 2 and beyond.

Two questions:
1) Must I file form 5329, since the 5329 instructions state
"If the trustee, custodian, or issuer of your IRA informs
you of the minimum required distribution, you can use that
amount." Or should I file 5329 showing no excess
accumulations and therefore no tax? Or should I calculate
it the RMD on my own, show the tax, and write the excuse
letter?

2) This has been happenning for 2 years. Are excess
accumulations additive, in that if I were $100 short in
2005, and $200 short in 2006, do I owe tax on 50% of $300 in
2006? I see this logic in the 590 for excess contributions,
but not excess accumulations.

-MVL

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Posted by Kreig Mitchell on January 30, 2007, 9:52 pm
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 mvl_groups_u...@yahoo.com wrote:

> I noticed what appears to be an error in my bank's required
> minimum distribution calculation.
>
> I am a beneficiary where the former ira owner died before
> the required beginning date.
>
> I have been taking distributions based on the single life
> expectancy minus x years formula. It appears that my bank
> has been erroneously calculating single life expectancy anew
> each year, resulting in 5-10% lower distributions than my
> true RMD in year 2 and beyond.
>
> Two questions:
> 1) Must I file form 5329, since the 5329 instructions state
> "If the trustee, custodian, or issuer of your IRA informs
> you of the minimum required distribution, you can use that
> amount." Or should I file 5329 showing no excess
> accumulations and therefore no tax? Or should I calculate
> it the RMD on my own, show the tax, and write the excuse
> letter?
>
> 2) This has been happenning for 2 years. Are excess
> accumulations additive, in that if I were $100 short in
> 2005, and $200 short in 2006, do I owe tax on 50% of $300 in
> 2006? I see this logic in the 590 for excess contributions,
> but not excess accumulations.

If a significant amount of money is involved you might hire
a tax attorney to (1) research the issue or (2) obtain a
letter ruling from the IRS.

Kreig Mitchell
www.irstaxtrouble.com
www.irstaxtrouble.com/blog.htm

<< ======================================================= >>
<< 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 Benjamin Yazersky CPA on January 30, 2007, 9:52 pm
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> I noticed what appears to be an error in my bank's required
> minimum distribution calculation.
>
> I am a beneficiary where the former ira owner died before
> the required beginning date.
>
> I have been taking distributions based on the single life
> expectancy minus x years formula. It appears that my bank
> has been erroneously calculating single life expectancy anew
> each year, resulting in 5-10% lower distributions than my
> true RMD in year 2 and beyond.
>
> Two questions:
> 1) Must I file form 5329, since the 5329 instructions state
> "If the trustee, custodian, or issuer of your IRA informs
> you of the minimum required distribution, you can use that
> amount." Or should I file 5329 showing no excess
> accumulations and therefore no tax? Or should I calculate
> it the RMD on my own, show the tax, and write the excuse
> letter?
>
> 2) This has been happenning for 2 years. Are excess
> accumulations additive, in that if I were $100 short in
> 2005, and $200 short in 2006, do I owe tax on 50% of $300 in
> 2006? I see this logic in the 590 for excess contributions,
> but not excess accumulations.

depending on the distribution options chosen, it may be
correct

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----

<< ======================================================= >>
<< 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 lurker on February 5, 2007, 8:03 pm
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mvl_groups_user@yahoo.com wrote:

[clip]
> It appears that my bank has been erroneously calculating
> single life expectancy anew each year, resulting in 5-10%
> lower distributions than my true RMD in year 2 and beyond.
[clip]

As a non professional wicked in spread sheet skills, I have
been forecasting my own "What if's" regarding my 401K. One
of the observations that complicated the math prediction
formulas for "Required Minimum Distributions" surprised me,
but makes sense if you think about it.

Publication 590, "Life Expetantcy Tables" shows that we are
"expected" to live longer each year that we get older.

In other words, the older you get, the older you are
expected to get. It increases a fractional year each year
you survive. The actual RMD is a victim of that
complication since life expectancy is a moving target.

<< ======================================================= >>
<< 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. >>
<< ======================================================= >>

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