I’m taking a SEPP (substantially equal periodic payment) withdrawal from my SEP IRA for five years (2023, 2024, 2025, 2026, and 2027) before I turn 59.5. I am my own plan administrator (that is, I don’t have one and am managing all this myself). Vanguard sends me a 1099 for this distribution, but the exception code is “1” (that is, “no exception”). When I fill out my tax information on turbotax, I specify that this is a SEPP withdrawal, get a 5329 form attached specifying this, and pay no penalty. However, the IRS flagged this because the copy of the 1099 that Vanguard sent them has code “1” while turbotax (I think correctly) records the code as “2” (because this IS an exception, and code “2” is used for SEPPs).
I informed the IRS of this (have not heard anything, probably don’t expect to), but…this will likely come up again for 2024 taxes (and 2025, 2026, and 2027).
I called Vanguard and after an hour or so on the phone, they basically said that they won’t put a code “2” because that would be somehow taking responsibility for my SEPP.
Any advice on this?
Thanks!
