G. Richard and Sara B. Childs - Page 4

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               On December 6, 1989, petitioner opened two IRA's with First            
          American Bank (the First American IRA's) and deposited $45,000 in           
          each account.  In opening the First American IRA's, petitioner              
          read the "terms and conditions" for such accounts that were                 
          enumerated on the IRA application form.  The terms and conditions           
          did not set forth any procedure for withdrawing funds from an               
          IRA.                                                                        
          Distribution of the First American IRA's                                    
               Before she retired, petitioner sought advice from the                  
          Internal Revenue Service (IRS) and the Maryland State Retirement            
          Agency (MSRA) regarding the taxability of a Transfer Refund.                
          Employees from the IRS advised petitioner that the Transfer                 
          Refund would be considered a lump-sum distribution and that it              
          would qualify for tax-free treatment if the distribution were               
          rolled over into an IRA within 60 days of receipt.  Petitioner's            
          contact with the MSRA also led petitioner to believe that the               
          Transfer Refund was eligible for tax-free rollover treatment.               
          Thus, at the time petitioner received the Transfer Refund, she              
          thought that the taxable portion qualified for tax-free rollover            
          treatment.                                                                  
               On March 28, 1990, the MSRA mailed a letter to all Transfer            
          Refund recipients, including petitioner, indicating that the                
          Transfer Refund was probably a taxable distribution.  The letter            
          advised the Transfer Refund recipients to contact a tax adviser             
          or the IRS if they had any questions.                                       




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