Steven Rudolph Kaldi - Page 10

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          2002-178.  The $25,000 in question here was not rolled over into            
          an IRA or other qualified plan.  Instead, that portion of the               
          distribution was placed into a regular investment account and is            
          thus not exempt from the additional early withdrawal tax or                 
          inclusion in petitioner’s 2002 gross income.                                
               Although Vestin Mortgage does offer qualified IRAs, in order           
          to make a rollover contribution, the person opening such an                 
          account would have to utilize the services of a custodian to make           
          a valid transfer of funds.  Petitioner did not employ the use of            
          a custodian when opening his account.                                       
               In addition, the documents petitioner filled out to open his           
          account with Vestin Mortgage indicated that he was interested in            
          a “transfer-on-death” account, an individual account.  According            
          to Vestin Mortgage’s representative, a beneficiary designation              
          for an IRA would have been filled out with a completely different           
          form, thus providing circumstantial evidence of petitioner’s                
               Petitioner argues that his intent was to open an IRA and not           
          an individual account, and he should not be penalized for the               
          mistake.  It is not unheard of that mistakes, such as clerical or           
          bookkeeping errors, made on the opening of a new account have               
          later come to light, rendering the rollover defective in some               
          way.  In some rare instances, courts have been willing to                   
          recharacterize an imperfect transaction as a rollover                       

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Last modified: November 10, 2007