Just a heads up on this:
Client did early IRA distribution in 2007 for college expenses for her child. Took the penalty exception on 5329. She's had requests for documentation to support the exception, which she provided, twice. Nice fat 50 page package of all the tuition bills, room & board, books, all that. Still not resolved, and she said the phone conversations are getting unpleasant. She's prepared to pay in a few hundred bucks at this point, because the agent told her he can't be sure the books/supplies were actually used by client's daughter! She just told me all this last night.
Had another client who did one early 2010, and her investment advisor suggested the investment firm send the check directly to the school, which seems like a good idea, and hopefully will head off any questions/problems. They gave her a copy of a Notice of Third Party Disbursement from her IRA with the college listed as the Payee and Mail-to-Address. I may attach that to the return next year.
Just passing along the latest.
Client did early IRA distribution in 2007 for college expenses for her child. Took the penalty exception on 5329. She's had requests for documentation to support the exception, which she provided, twice. Nice fat 50 page package of all the tuition bills, room & board, books, all that. Still not resolved, and she said the phone conversations are getting unpleasant. She's prepared to pay in a few hundred bucks at this point, because the agent told her he can't be sure the books/supplies were actually used by client's daughter! She just told me all this last night.
Had another client who did one early 2010, and her investment advisor suggested the investment firm send the check directly to the school, which seems like a good idea, and hopefully will head off any questions/problems. They gave her a copy of a Notice of Third Party Disbursement from her IRA with the college listed as the Payee and Mail-to-Address. I may attach that to the return next year.
Just passing along the latest.