rhyolite[at]nettally.com asked:

- quote -

Yes, there's an audit trail. And I speak from personal
experience. Bank A wrote a check to me for X dollars. The
same day, I took that check to Bank B, and deposited all but
$5,000, as a partial rollover. I reported the full amount
on line 15a, and the $5K on 15b (not sure those were the
same line #s, as this was more than 10 years ago), so I had
done everything right. I was over 59 and taking a normal
distribution.

Unfortunately, Bank A reported the distribution, but Bank B
made an incorrect report. So, two years later I received a
letter audit from IRS, asking why I didn't report my X
dollar distribution on my return for the year in question.

I immediately contacted Bank B (which happened to be my main
bank), and they checked their records for that year and
discovered they had made a mistake in the manner they
reported the "rollover" -- apparently showing it as a "new
IRA."

The bank duly provided me a letter of explanation, which I
attached to my response to the letter audit, along with a
copy of my return. About a month later, I received another
letter from the IRS, confirming acceptance of my explanation
and saying the matter was closed.

A clean bill of health on an IRS audit?
-- PRICELESS !!

Bill ;-)

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"**THE-RFI-EMI-GUY**" <rhyolite[at]nettally.com> wrote:

- quote -

They should.

- quote -

It's two mints in one. Our system is "voluntary," which
means that the taxpayer accurately reports his income and
computes his tax without the tax collector coming to his
door to do it for him.

Charitably speaking, some people forget to report
everything, which is why there's information reporting by
third parties. It's the government's helping you do what
you meant to do in the beginning.

--
Phil Marti
Clarksburg, MD

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Is there an audit trail to this? I mean if I withdraw from
bank A IRA and deposit to bank B IRA 59 days later, do the
banks file paperwork reflecting this? To say its as if it
didn't happen implies that the IRS is either notified by
both banks or that the reporting is voluntary on part of the
taxpayer. Which is it?

"Treason doth never prosper: what's the reason?
For if it prosper, none dare call it treason."

"Follow The Money" ;-P

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1. Yes
2. Yes, if reinvested by 60 days from withdrawal

Missy Doyle

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Jay wrote:

- quote -

The trustee/custodian is not required to withhold the 10%
penalty.

- quote -

Unless you meet one of the exceptions, you pay the penalty
with your tax return. Also, the penalty tax is due even if
you otherwise have no tax liability.

- quote -

If you return the money within 60 days from when you
withdrew it, its as if it never happened.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I made an early withdrawal from my sep-ira account and my
bank/institution has not withheld any 10% penalty. My only
income in 2005 is from salary and some minor investment
income.

Q1. When and how do I pay the 10% penalty? Is it when I file
my returns in April?

Q2. I made the withdrawal a month ago. Can I still put it
back in my same sep-ira account and have no penalty or tax
to pay on it?

Thanks.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >