IRS Reviews Early Distributions from IRAs and Qualified Plans

  1. IRS Reviews Early Distributions from IRAs and Qualified Plans

    The IRS recently conducted a project to review the taxable distributions from IRAs and qualified retirement plans reported on Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc.). In its review, the IRS looked at whether individuals reported the amounts marked as “Early distribution, no known exception” (box 7, code 1) as taxable distributions and whether the additional 10% early distribution tax under IRC Sec. 72(t) was included. The IRS found that almost 40% of the individuals made errors on their Form 1040 tax returns and most didn’t qualify for the exception to the 10% early withdrawal penalty. The IRS provides a helpful chart listing the various exceptions to the 10% penalty at http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics—Tax-on-Early-Distributions

  2. IRS To Include Charter School Employees In Proposed Code Sec. 414(d) Regs

    The IRS recently announced that it anticipates including rules for charter school employees who participate in state and local government retirement plans in proposed regs under Code Sec. 414(d). The IRS also provided transition relief for the period before final regs are issued.
    More than 40 states and the District of Columbia allow the chartering of independent public schools. Charter schools, the IRS noted, are treated as public schools, but are not subject to governmental control in the same manner as traditional public schools.

  3. Tax Preparer Directory Opens

    The IRS has launched a new, online directory of return preparers to assist taxpayers in finding a credentialed tax professional. The searchable and sortable directory lists preparers with valid 2015 Preparer Tax Identification Numbers (PTINs). The data includes the name, city, state, and zip code of attorneys, CPAs, enrolled agents, and those who have completed the IRS requirements for the voluntary Annual Filing Season Program (AFSP). The directory, located at http://irs.treasury.gov/rpo/rpo.jsf , will be updated regularly and includes more than 666,000 preparers with active PTINs at the beginning of the filing season. News Release IR-2015-22.