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Employee Plans Compliance Unit (EPCU) - Completed Projects- Projects with Summary Reports - Form 1099R-72(t) Project

Overview

The Employee Plans Compliance Unit (EPCU) designed the Form 1099-R - 72(t) Project (Project) to evaluate compliance under the current Form 1099-R reporting regimen by determining whether individuals complied by reporting taxable distributions and the 10% additional tax imposed by IRC Section 72(t) on their individual income tax returns.

Exceptions to the 10% additional tax are reported on line 2 of Form 5329. The Form 5329 instructions list 12 acceptable exceptions.

The information obtained from this Project helps the IRS have a better understanding of the qualified plan sector and assists with development of tools, guidance and enforcement efforts.

Results

The majority of cases presented a valid exception to the 10% additional tax on early distributions or had timely rolled over the distribution. However, a substantial number of cases improperly noted an “Other” exception to the 10% additional tax based on financial hardship alone resulting in amended return filings or referrals for additional review.

Results Table

No Change 99 63%
     
Form 1040X Filings 30 19%
Referrals 23 14%
Other 3 2%
Systemic Errors 2 1%
Taxpayer Error 1 1%
Total 158 100%

 

Page Last Reviewed or Updated: 21-Nov-2016