Taxes, Stupid Taxes

I usually don’t procrastinate on taxes until the very last day – just close to the very last day – and this year was no exception. I was actually almost done with my 2006 tax return a couple of days ago, except for one trifling little detail that could result in $2000 more in taxes than I really think that I owe.

Last year, I took 2 separate distributions from the company savings plan. Neither of them should have been subject to the 10% penalty for early withdrawal. However, on the 1099R form from T. Rowe Price, the code that identified the type of disbursement was a “1” – early disbursement (non-Roth IRA) with no known exceptions.

The first disbursement was withdrawal of all employee stock ownership plan (ESOP) funds that could legally be withdrawn. The other was withdrawal of all post 1986 after tax money.

Before I can submit our tax return, I need to get a corrected 1099R from T. Rowe Price. Since there isn’t any time left, I’m sending in the form for an automatic extension for my tax return, along with a check for the amount that I believe that I owe. This will give us until October 15 to get the tax return filed and, hopefully, I’ll be able to get a corrected form much earlier than that and will be able to avoid any IRS penalties.

I am certainly glad that we decided not to stay with T. Rowe Price. With the errors and delays associated with the second distribution last year, there was no question about staying with them. The biggest frustration – besides not being able to get the money in a timely manner – was having to deal with a totally different person each time I contacted them.

Next year, I will have to deal with the taxes much earlier – and will probably have get an accountant involved as there is a lot more tax related issues to deal with because of the way I moved my savings out of T. Rowe Price. After that, taxes should be relatively simple again.

finance, retirement, taxes

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