Internal Revenue Service and age 70 1/2 rule

This post is actually a continuation of my previous post "Pain of turning 70 1/2 in America".

I would like to know why IRS has selected age 70 1/2? I am talking about the IRS's rule that says, "In the year you turn 70 1/2 you must start taking the required minimum distribution from your retirement accounts". Why not 70 or 75 or even 71 or 76 years? Is it because 70 1/2 sounds like a round figure to IRS rather than 70 years and 5 months or 70 years and 7 months?

Oh well. IRS is just like God. They just create rules and we, ordinary citizens, just have to abide by them. Don't dare to question them or challenge them. You'll be thrown in the jail.

Shoban Sen

Pain of turning 70 1/2 in America

I don't know if this happens in any other country of the world. But in America, if you save some money in a retirement account (like IRA) and you turn 70 1/2, hell breaks loose on you. People older than me have experienced this already. But those who are still young and trying to build a retirement nest egg, be warned. It is not going to be pleasant when you turn 70 1/2 years.

Let me elaborate. I turned 70 1/2 years this year. And I indeed had an IRA account with the credit union of the institution where I worked. Way back in April, my credit union notified me that I must receive a minimum distribution from that account by December 31 of this year (or by April 15 of 2012 - IRS gives some grace period to those who are first time victims of this law). Else almighty IRS will charge me hefty penalty. When asked how much is the minimum required distribution, the lady said that was a complicated calculation but if I wanted she would be happy to calculate that for me and would get back to me. I agreed. Next day she called me back and told me the amount and said she was going to mail me the necessary forrms to fill out, sign, and mail back to her.

In a couple of days I received those Required Minimum Distribution forms. My God, who knew they would be so complicated and so lengthy? I could not even figure out what to write in some of the places. So I called the credit union lady and asked for help. She was a sweetheart. She told me what to write where. So with her help, I completed the forms, signed, and mailed them back to her. I was relieved. I won't have to face that stiff IRS penalty for not withdrawing the required minimum amount from my IRA account.

All on a sudden, earlier this month, I received a letter from TIAA CREF which said I must contact them immediately to receive some important account information. So I called them and learned that I must receive the rquired minimum distribution from two of my accounts with them to avoid serious tax penalty. I did not even know that I had any retirement account with them. (I had some investments with them through my employer.)  When asked, they explained when I retired, my employer had put my vacation cashout (vacation days that was due to me but I did not take) and something else (which I still don't know what) in two separate retirement accounts in my name to help me save on taxes up front. TIAA CREF volunteered to calculate the Required Minimum Distribution for me since the formula IRS uses to calculate this amount is rather complicated for human beings without extra-ordinary brain power. I thanked the TIAA CREF customer service representative for his generosity. He also said the amount in one of these accounts was rather small, so I would be better off withdrawing the full amount (100%) from that account and take the minimum distribution from the other account. I agreed. He promised to put the necessary application blanks in the mail the very next day for me to fill out, sign, and mail back to them.

Sure enough, in about 4-5 days I received two large envelopes from TIAA CREF. I knew what they contained. But when I opened the envelopes, I really got pissed off. The application blanks were each 8-pages long with elaborate instructions for each thing that I needed to fill out. Each needed my wife's signature in one place and her signature needed to be notarized or certified by my former employer's authorized representative. Each form also required my former employer's rep's signature at a different place basically giving consent to my money withdrawal request. None of these were required in the form the credit union had me fill out as described above. So I called TIAA CREF again to find out if these steps were really necessary as these meant that both me and my wife must travel to my former employer's office to fulfill these requirements. The TIAA CREF rep. checked something in the computer and said it would not be necessary since the amount involved in both cases was less than $5000. He asked me to write a note on the respective spaces in the forms saying since the amount was less than $5000, wife's signature verification would not be needed. For the employer's consent part he said they can do that for me by faxing the form over to my employer. The employer could sign and fax back the form to them. I was relived and thanked him profusely for making our lives a little easy. I then filled out the rest of these 8-page long forms and mailed them back to TIAA CREF.

In a few days, the forms were returned to me by TIAA CREF saying wife's signature verification and employer's consent are both MANDATORY IRRESPECTIVE OF THE AMOUNT INVOLVED. "Fuck this" came out of my mouth spontaneously!

To make a long story short, my wife and I went to my former's employer's office the next day and completed the paperwork to the Tee. Then I mailed back the forms to TIAA CREF.

In a few days two small amounts were deposited in my bank account coming from TIAA CREF. Now listen to this: one of the amounts was $3.29 ($3.87 less taxes -- this is from the retirement account that I decided to close by withdrawing the whole amount)! I spent more than $3.29 for postage (sending out the 8-page long forms twice to TIAA CREF) and traveling to my former's employer's office to get their signature on two places in the form.!!!

Long live Federal Paperwork Reduction Act!

Postscript: I was told by my former employer's rep. that it was TRUE that if the amount inolved was less than $5000,  verification of spouse's signature was not required by law.

Shoban Sen

Form 1099-MISC problem - I absolutely hate this ...

I don't know about you, but I absolutely hate this. Have you ever tried to contact a big company to ask a question or complain about their products/services and you were referred to their FAQ, or Forum or Message Board or something similar? This has become the norm these days. You cannot pick-up the phone or e-mail them directly, because you cannot find their appropriate phone number or e-mail address anywhere. These big companies very carefully guard their direct contact info. Everything is indirect. And these discussion forums are a nuisance as far as I am concerned. A bunch of stupids who have nothing else to do sit there all day and jump to answer your question -- most of the time either not to the point or what they tell you is totally incorrect!

If you use the Internet, I am sure you understood what I mean. The case in point today is Google. I decided to use their own platform to express my dissatisfaction. Hey, I have freedom of speech. So let me use it.

I have a few websites and I run Google AdSense ads on them and earn pocket change from Google. The income is ridiculously low - just pennies per click. Whatever it is, I have to report the income to IRS and Google sends me Form 1099-MISC in the beginning of each calender year stating how much they paid me in the preceeding calender year. This is an IRS requirement and Google reports my income to IRS also.

This year, for some reason, I did not receive the above stated Form 1099-MISC from Google (probably it got lost in the mail) and so I cannot complete my tax return. Normally, in such instances, one can always request the payer for a duplicate copy. So I thought of contacting Google and ask for a duplicate copy. And that is when the problem started. How can I contact Google? What is the phone number to use? What e-mail address should I use to contact their appropriate depatment? I searched and searched, couldn't find anything. The best e-mail address I found was for AdSense Support. So I sent them an e-mail requesting a duplicate Form 1099-MISC or for a link where I can view Form 1099-MISC online and print it out (a more or less standard practice these days).

What a big help I got! The reply starts with: "This message was sent from a notification-only email address that does not accept incoming email. Please do not reply to this message." Then it continues as follows:

"We noticed that you may have contacted us without first visiting our HelpCenter: https://www.google.com/adsense/support?sourceid=nhcar. To receive faster responses to your questions, we encourage you to visit our helpresources -- they're full of instant, reliable answers to many commonquestions and issues.

I can't log in to my account.
https://www.google.com/adsense/support/bin/topic.py?topic=8430&sourceid=tx&subid=nhcar&medium=em

I can't see ads on my website.
https://www.google.com/adsense/support/bin/topic.py?topic=8439&sourceid=tx&subid=nhcar&medium=em

I haven't received a PIN or payment yet.
https://www.google.com/adsense/support/bin/topic.py?topic=136&sourceid=tx&subid=nhcar&medium=em

My application was disapproved.
https://www.google.com/adsense/support/bin/answer.py?hl=en&answer=81904&sourceid=asos&subid=ww-ww-em-hc&medium=em.

Or, get application approval tips at
https://www.google.com/adsense/support/bin/answer.py?answer=75109&sourceid=asos&subid=ww-ww-em-hc&medium=em

If your issue isn't covered in the links above, we suggest you search or browse our online help resources listed below:-

AdSense Help Center: Our most comprehensive source for answers to commonquestions.
https://www.google.com/adsense/support?sourceid=asos&subid=ww-ww-em-hc&medium=em.

- AdSense Help Forum: Share questions and knowledge with other AdSensepublishers. AdSense team representatives also contribute to discussions and provide help.
http://www.google.com/support/forum/p/AdSense?hl=en&utm_source=asos&utm_campaign=ww-ww-em-hc&utm_medium=em.

- Inside AdSense blog: Learn the latest AdSense news, tips, and updates --browse by label, search, or subscribe to receive updates via email or feed.
http://adsense.blogspot.com?utm_source=asos&utm_campaign=ww-ww-em-hc&utm_medium=em.

Sincerely,

The Google AdSense Team"

Wow, I feel like a criminal. Without first checking ALL of these above mentioned places and reading hundreds of entries how dare I contact them for help??? Don't I know their time is much more important than mine?

But actually I am thinking instead of wasting their time and writing such a long message to me (I know these are their form letters - they just copy and paste), would it not have been much easier just to mail a duplicate Form 1099-MISC to me or send me the link where it is available online? I got my bank's Form 1099-INT online. Why can't the biggest Search Engine company in the world make it available online? Google has conquered the Web. They are expanding everyday - they have browsers, they have telephones (competition to iPhone), and what not? They are a GIANT COMPANY. But they do not want to help their customers!!!

I know I cannot fight with Google ... they are simply too big. But I can make my dissatisfaction known to the world through them! I am repeating the keyword Form 1099-MISC again and again on purpose. I know this entry will be indexed by Google today itself and it will show up in their search results for "Form 1099-MISC" latest by tomorrow. Anybody searching Form 1099-MISC will find this entry very easily and will read it! Paying back Google with their own coin!!

Lastly, I have myself figured out a way to get a duplicate Form 1099-MISC from Google without trying to contact them anymore. I shall call IRS (I have their phone number) and tell them the problem. They will call Google and ask Google to mail a duplicate Form 1099-MISC to me. How about that for a solution to my problem???

Shoban Sen
http://bestnetguru.com/