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Sep transferred to brokerage account

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W

worried ga

Guest
I have a huge problem and need advice. In opening my current investment account I transferred funds from a previous firm, which was an employer funded SEP Account/without salary reduction. I've since made several withdrawals in 2001 (early-I'm not of retirement age), in times of serious personal debt. I resigned my job and am now working in a home based business (S-Corp). The last withdrawal, I was told by an Account Rep. that it was not a SEP account and had never been transferred as such. I was ignorant to the whole thing, with little experience in recognizing the discrepancy upon receiving verification of the account opening. I've taken considerable losses on my investments, so as a whole, my account was not in the positive from the initial moneys received into the account. (which I have since sold stock to withdraw money). I know I will be taxed heavily, but on what portions considering the losses and the fact that the account was never really a SEP (would I be liable for the 10% penalty, etc.) Will I be able to use the formula: Amount rec. x Cost of Account/Balance of account = tax free amount, or should this even be treated as a SEP distribution. Obviously, I was never taxed on these withdrawals. I've received my W-2 from my previous employer. The "retirement plan" box is checked. That's it. No amounts for the year were included. I probably won't receive anything from the brokerage account other than maybe a 1099 composite (but I doubt it). Any knowledge you can provide will be extremely appreciated. I fear the IRS until I can resolve some of my questions. Do I need a lawyer, or can I do this on my own? :confused:
 


vrzirn

Senior Member
No way can you do this yourself. Your problem has serious and expensive tax ramifications. You need a really good EA,CPA or tax attorney.
(Some retirement plans let you borrow for 60 days and a defined benefit plan permits you to borrow for 5 years.This is cheap money for a quick fix but I do not know if you need to be of retirement age to do that.)
 
W

worried ga

Guest
Thanks for the input. I know it will be expensive and I've passed the 60 day rollover. It seems like I read something about a 5 year plan. I'll try to research that. Hopefully, since my income for 2001 is about half what it should have been, this tax burden will balance out somewhat! Hiring an attorney is going to add to the expense. I figure if by chance I end up trying it on my own, the worst that can happen is that the IRS will send me a notice telling me I figured wrong, here's what I owe! Or, I'll be sent to "IRS Prison"!!! Ha, Ha!
 

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