Update.I called to check the status about a week after faxing my response. They hadn't processed my faxed letter at the time but told me to give them at least 30 days. So I had no choice but to wait patiently. But I was getting really worried about the due date of December 11th, since the original statement said that interest would start accumulating on that day. So I called this morning.
I was thinking the best case scenario for my phone call was that they would confirm receipt of the fax and let me know that it was still being processed. The agent found the faxed letter, but let me know it had been misfiled due to me not including the relevant tax year a the top of the correspondence. She also read over the letter and then asked if I could hold for a bit.
After she returned she said that she was able to have the issue transferred to her, and that she had removed the penalty. She specifically called out some of the reasoning I gave in the letter. She said it will take about two weeks for me to receive a mailed letter confirming the zero balance. I'll probably still have a little anxiety until I receive that, but in the short-term: what a relief!
A few key takeaways from this:
1) Always file your 5500-EZ, especially when closing your individual 401(k)
2) If you fail or forget to file, make sure you apply for the Penalty Relief Program as described in the form instructions when you do file
3) If you fail to do so and receive a fine, call the IRS immediately for advice on what to include and not include in your letter (this ended up being very important for me)
4) Include your EIN and the relevant tax year in the header of all correspondence
5) Call to confirm receipt of your letter to make sure it's filed correctly
It's also worth noting how friendly and helpful the various agents at the IRS have been through this process. After dealing with various government bureaucracies in the past I was definitely not expecting that. In fact, I would say I had a better experience talking with them and getting good advice than I have had with the various CPAs I've talked with in past.
Thanks to everyone who responded with advice and words of encouragement. If you stumble on this post in the future because you're facing a similar dilemma, I hope this it's helpful for you and wish you the best of luck as you're navigating this!
I was thinking the best case scenario for my phone call was that they would confirm receipt of the fax and let me know that it was still being processed. The agent found the faxed letter, but let me know it had been misfiled due to me not including the relevant tax year a the top of the correspondence. She also read over the letter and then asked if I could hold for a bit.
After she returned she said that she was able to have the issue transferred to her, and that she had removed the penalty. She specifically called out some of the reasoning I gave in the letter. She said it will take about two weeks for me to receive a mailed letter confirming the zero balance. I'll probably still have a little anxiety until I receive that, but in the short-term: what a relief!
A few key takeaways from this:
1) Always file your 5500-EZ, especially when closing your individual 401(k)
2) If you fail or forget to file, make sure you apply for the Penalty Relief Program as described in the form instructions when you do file
3) If you fail to do so and receive a fine, call the IRS immediately for advice on what to include and not include in your letter (this ended up being very important for me)
4) Include your EIN and the relevant tax year in the header of all correspondence
5) Call to confirm receipt of your letter to make sure it's filed correctly
It's also worth noting how friendly and helpful the various agents at the IRS have been through this process. After dealing with various government bureaucracies in the past I was definitely not expecting that. In fact, I would say I had a better experience talking with them and getting good advice than I have had with the various CPAs I've talked with in past.
Thanks to everyone who responded with advice and words of encouragement. If you stumble on this post in the future because you're facing a similar dilemma, I hope this it's helpful for you and wish you the best of luck as you're navigating this!
Statistics: Posted by favoriteagency — Mon Dec 09, 2024 9:47 am — Replies 33 — Views 3345