On May 6, 8:11 pm, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:

- quote -

Sorry for typo, should be 1099-Q above. R is for rollovers from 401k
plans and such.

The penalty on early withdrawal of savings is listed on form 1099-
INT. The 1099-Q does not have a field for penalty, so I don't know if
you can deduct it. The following method is one that I considered: say
you contributed 5k to your 529 plan and did not receive a federal
deduction, and your earnings grew tax free by 1k, then of the $120
penalty 5/6*120=100 comes from the original 5k so is considered paid
with post-tax dollars, but I don't know if you can deduct it.

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On May 6, 2:50 pm, kastnna <kast...[at]auburnalum.org> wrote:

- quote -

Probably the first way -- ie. the 1099-R gross distribution will be
the actual amount minus the $120. If you pay the penalty with post-
tax dollars, then you can deduct it as an adjustment to income, line
30 ("penalty on early withdrawal of savings").

--
<< ------------------------------------------------------- > << 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 (2007) - All rights reserved. > << ------------------------------------------------------- >

A client wants to roll her state sponsored qualified pre-paid tuition
program into a 529 plan for her son. The state program does not allow
for direct trustee-to-trustee transfer, only 60-day rollovers. The
client received the check minus a $120 in maintenance and cancellation
fees.

Will the 1099 reflect the account value minus the $120 or will it be
included? If included, will she need to make-up the $120 out of her
own pocket?

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 (2007) - All rights reserved. > << ------------------------------------------------------- >