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[Official Guidance] 2016 IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)
"If you only owe the additional 10% tax on early distributions, you may be able to report this tax directly on Form 1040, line 59, or Form 1040NR, line 57, without filing Form 5329. See the instructions for Form 1040, line 59, or for Form 1040NR, line 57." (Internal Revenue Service [IRS])
Interesting Angles on the DOL's Fiduciary Rule, Part 28
"Under the DOL's fiduciary regulation, the recommendation of a plan distribution and IRA rollover will be fiduciary advice, subject to the best interest standard of care and the prohibited transaction rules. But, what if a participant takes a distribution and rolls over into an IRA with an adviser ... without a recommendation by the adviser?" (
Comparing IRAs: Trusteed and Traditional
"With a traditional IRA, beneficiaries can choose to name their own beneficiaries for those assets ... This gives traditional IRA beneficiaries more control over IRA assets passed on to them but it may not be in line with IRA owner's intentions or wishes. Likewise, traditional IRA beneficiaries can choose to withdraw any amount from the IRA and spend down the money quickly. With a Trusteed IRA, you can maintain control even after you've passed away, ensuring that your loved ones can receive regular distributions and also name how, when, and to whom you would like your IRA assets to be distributed." (Manning & Napier)
[Opinion] Trump Election Casts Doubt on DOL Conflict of Interest Rule
"Though there is little detail on specific policies by the Trump campaign about many issues including the DOL rule ... the rule could be in jeopardy based on rhetoric from Trump about rolling back on regulations in general. In October, Anthony Scaramucci of Skybridge Capital and recently named adviser to Trump on small business affairs, boldly claimed that the DOL rule would be repealed if Trump was elected calling it a clear case of Federal overreach. Any chance that the SEC would promulgate fiduciary rules under Dodd-Frank seems unlikely now." (401kTV)
The Reason for the DOL Rule: IRAs
"The primary reason for issuance of the Rule doesn't involve qualified retirement plans. Although litigation over the last decade has shown that hidden -- and therefore high -- costs exist even in multibillion-dollar 401(k) plans sponsored by giant corporations ... the $4.7 trillion held in 401(k) plans is relatively better regulated and incurs relatively lower costs than the $7.4 trillion held in IRAs.... The real reason for issuance of the Rule is to mitigate what the DOL regards as the bad effects resulting from the practices of some advisors providing conflicted investment advice and products to unsuspecting IRA owners." (Morningstar)
[Guidance Overview] DOL Issues FAQs Explaining Aspects of the 2016 Final Fiduciary Rule
"[So] long as the advisor is not making the actual rollover decision, the BIC exemption remains available.... While the Department has interpretive authority over how the ERISA prohibited transaction rules apply to IRAs, the IRS has enforcement authority.... The Department made clear that an adviser/financial institution may not rely on the level fee provisions in the BIC exemption if they receive third party payments (e.g., 12b-1 fees or revenue sharing payments) in connection with the assets recommended.... [I]ndependent marketing organizations (IMOs) can sell annuity contracts to retirement investors and receive compensation such as commissions and override payments." (Mintz Levin)
Bank of America Merrill Lynch Tells Advisers to Stop Selling Mutual Funds in Brokerage IRAs Now
"The brokerage firm is eliminating the potential for compensation conflicts that could arise between now and April 10, 2017, when the Labor Department fiduciary rule takes effect. The new regulation, which requires advisers to put their clients' interest first for retirement accounts, has created a rift in the industry on whether to keep selling IRAs on a commission basis or restrict them to fee-based accounts." (InvestmentNews)
[Guidance Overview] FAQs on New Fiduciary Rule Issued
"Discretionary 'level fee' advisers will be required to comply with the 'streamlined' BICE requirements in connection with any rollover recommendation ... Firms may charge higher fees for complex products that require, for example, greater due diligence, training and closer supervision, but will need to justify the basis for the increased costs and monitor recommendations between categories.... Variable back-end awards, bonuses and similar back-end incentives are not permitted under the BICE and cannot be offered on or after October 27, 2016 (the date the FAQs were issued)." (Warner Norcross & Judd LLP)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 26
"[T]he reasonable compensation limitation is not new. It's been with us for decades. But, if that's the case, why hasn't there been more discussion and, in the bigger picture, more enforcement of the rule? ... [By] and large, the rule has been ignored.... IRA and plan investors will be able to pursue breach of contract claims for excess compensation.... [W]hile the law limiting the compensation of advisers (and Financial Institutions) is not new, the enforcement mechanism will be." (
[Guidance Overview] DOL Issues First Guidance on Fiduciary Rule
"The FAQs address a number of important topics: ... Scope of BIC Exemption ... What Constitutes Unreasonable Compensation? ... Incentive Compensation for FAs ... Recruitment Bonuses ... Level Fee Fiduciaries ... Bank Networking Arrangements ... Effective Date." (Morrison & Foerster LLP, via Lexology)
From EBSA Secretary Phyllis Borzi: Your Conflicts of Interest Questions Answered
"Earlier this year, we announced new protections to ensure that Americans who are saving for retirement will have access to financial advice in their best interest.... One of the first and most important efforts on this front is the publication of FAQs based on the input we've received from the financial services industry and others. These questions are an important part of the regulatory process as they allow the department to clarify important parts of the rule, and head off misunderstandings that could lead to bad results for retirement savers, or financial services professionals.... Our initial focus has been, and remains, broad compliance with the rule." (U.S. Department of Labor [DOL] Blog)
[Official Guidance] Text of DOL FAQs on Conflict of Interest Exemptions (PDF)
24 pages. 34 Q&As, including: "Is compliance with the BIC Exemption required as a condition of executing a transaction, such as a rollover, at the direction of a client in the absence of an investment recommendation? ...Is the BIC Exemption available for advisers who act as discretionary fiduciaries to retirement plans and then provide investment advice to a participant to roll over assets to an IRA for which the adviser will provide advice? ... Is the BIC Exemption available for recommendations to roll over assets to an IRA to be managed on a going- forward basis by a discretionary investment manager? ... Is 'robo-advice' covered by the BIC Exemption or other exemption? ... Does the full BIC Exemption prohibit a financial institution or adviser from discounting prices paid by customers for services? ... Under the BIC Exemption, who are 'level fee fiduciaries' and what prohibited transaction relief is available to them? ... Can an adviser and financial institution rely on the level fee provisions of the BIC Exemption for investment advice to roll over from an existing plan to an IRA if the adviser does not have reliable information about the existing plan's expenses and features? ... Can a financial institution and adviser rely on the level fee provisions in the BIC Exemption to recommend a rollover from an employee benefit plan to an IRA if the adviser will become a discretionary manager with respect to the IRA assets after the rollover? ... Can insurance companies rely on independent insurance agents to sell fixed rate and fixed indexed annuities to retirement investors after the applicability date of the Rule? ... What is the role of insurance intermediaries, such as independent marketing organizations (IMOs), in the sale of annuity contracts to retirement investors after the applicability date of the Rule? Can they receive compensation such as commissions and override payments? ...Is there a way to get an exemption for advice to engage in principal transactions involving assets that are not specifically covered by the Principal Transactions Exemption? ... Does PTE 84- 24 cover rollovers into an annuity? ... The wording of PTE 84-24's reasonable compensation standard differs from the reasonable compensation standard used in the BIC Exemption. Does the Department intend to interpret them differently? ... How will the Department approach implementation of the new rule and exemptions during the period when financial institutions and advisers are coming into compliance?" (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
[Official Guidance] Text of IRS Notice 2016-62: 2017 Limitations Adjusted as Provided in Section 415(d), Etc. (PDF)
"Effective January 1, 201 7, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $210,000 to $215,000.... The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2017 from $53,000 to $54,000.... The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $18,000.... The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $265,000 to $270,000 ... The limitation used in the definition of 'highly compensated employee' under Section 414(q)(1)(B) remains unchanged at $120,000 ... [T]the deduction for taxpayers making contributions to a traditional IRA is phased out for single individuals and heads of household who are active participants in a qualified plan ... and have adjusted gross incomes ... between $62,000 and $72,000, increased from between $61,000 and $71,000." (Internal Revenue Service [IRS])
Using Public Policy to Create IRA Irony
"By creating a 'safe harbor' that allows states to mandate payroll deduction IRAs for these workers, the DOL fails to provide the protections afforded by ERISA to participants in these State-sponsored IRA plans (other than, presumably, the investment advice rule). The irony (and intellectual inconsistency) is patent: IRAs are important enough to be caught within the ambit of ERISA's fiduciary rule, but large state plans using IRAs can otherwise avoid the myriad of other ERISA protections." (Benefits Bryan Cave)
[Official Guidance] Text of IRS Announcement 2016-39: Retirement Plan Distribution Relief for Victims of Hurricane Matthew (PDF)
"[A] qualified employer plan will not be treated as failing to satisfy any requirement under the Code or regulations merely because the plan makes a loan, or a hardship distribution for a need arising from Hurricane Matthew, to an employee or former employee whose principal residence on October 4, 2016, (October 3, 2016, for Florida) was located in one of the counties identified for individual assistance by [FEMA] because of the devastation caused by Hurricane Matthew or whose place of employment was located in one of these counties on that applicable date or whose lineal ascendant or descendant, dependent, or spouse had a principal residence or place of employment in one of these counties on that date. These counties identified for individual assistance by FEMA are in Florida, Georgia, North Carolina and South Carolina and can be found on FEMA's website ...

"Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and the distribution is treated as a hardship distribution for all purposes under the Code and regulations ...

"[A] 'qualified employer plan' means a plan or contract meeting the requirements of Section 401(a), 403(a) or 403(b), and ... a plan described in Section 457(b) maintained by an eligible employer described in Section 457(e)(1)(A), and any hardship arising from Hurricane Matthew is treated as an 'unforeseeable emergency' for purposes of distributions from such plans....

"To make a loan or hardship distribution pursuant to the relief provided in this announcement, a qualified employer plan that does not provide for them must be amended to provide for loans or hardship distributions no later than the end of the first plan year beginning after December 31, 2016. To qualify for the relief under this announcement, a hardship distribution must be made on account of a hardship resulting from Hurricane Matthew and be made on or after October 4, 2016, (October 3, 2016, for Florida) and no later than March 15, 2017." (Internal Revenue Service [IRS])

[Guidance Overview] IRS Information Release 2016-138: Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Matthew (PDF)
"Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.... Currently, parts of North Carolina, South Carolina, Georgia and Florida qualify for individual assistance." (Internal Revenue Service [IRS])
How Proposed Caps Could Impact IRA and 401(k) Accounts
"According to a 2014 [GAO] report ... there are almost 9,000 Americans who have accumulated more than $5 million in an IRA. However, the proposed cap would be a soft cap, allowing more than $3.4 million in an IRA or 401(k), as long as the amounts that exceed the cap are earnings, not contributions. Another interesting finding in the Government Accountability Office report was the estimate that there are 1,000 Americans with more than $10 million dollars saved in an IRA." (InvestmentNews)
When It Comes to Retirement Distributions, 401(k)s Lack Valuable Flexibility
"There's a key area where IRAs have a clear advantage over 401(k)s: in-retirement distributions. Simply put, investors who decide to leave money in their company retirement plans and draw from them to meet their living expenses typically have much less flexibility and control over withdrawals." (Morningstar)
[Guidance Overview] IRS Allows Self-Certification for Late Rollover Contributions
"Retirement plan administrators may accept late rollover contributions from taxpayers who self-certify that they qualify for a waiver of the 60-day rule. Plan sponsors may need to update their communications about rollovers to reflect the new IRS waiver procedures. The self-certification applies only to the 60-day requirement, not to other requirements for a valid rollover." (Willis Towers Watson)
[Guidance Overview] New York City to Establish City-Wide Private Sector Retirement Program
"The proposed program [includes] ... [1] A voluntary 401(k) marketplace, making available to private sector employers 'screened, competing 401(k) and other retirement plans from private and public providers.' ... [2] Private sector employer participation in a 401(k) MEP coordinated by the City of New York, including employers having no common ownership or business purpose.... [3] The New York City Roth IRA would be available as an alternative to [these] options, and employers (the news release says 'all') not offering a retirement plan would automatically enroll employees in a payroll deduction Roth IRA savings program." (Ascensus)
Disability and the Exception to 10% Early Distribution Penalty
"Many people, both advisors and IRA owners alike, think that if they are receiving any sort of disability payment that they will qualify for this penalty exception. Unfortunately, that is not true." (Slott Report)
Merrill Lynch's Move to End Commission IRAs a 'Tectonic Shift' for Brokerage Industry
"The firm, which houses more than 14,000 advisers, will no longer offer new, advised commission-based individual retirement accounts beginning April 10, the implementation date for the rule. Rather, it will migrate clients to its advisory platform, self-directed brokerage or robo advisory service. And, it could push the other large brokerages to respond in a similar way." (InvestmentNews)
New York City Comptroller Unveils 3-Pronged Retirement Program for Private-Sector Employees
"Under the umbrella title of 'New York City Nest Egg,' [New York City Comptroller Scott M. Stringer] proposed creating: [1] The Empire City 401(k), which would enable employers to join a single, publicly sponsored 401(k) plan based on a new federal law allowing multiple employers that are unaffiliated to join a single plan. [2] The NYC 401(k) Marketplace, a voluntary exchange overseen by an independent board that would offer employers a choice of 'screened, competing 401(k) and other retirement plans from private and public providers' ... [3] The NYC Roth IRA, an automatic default designed for eligible private-sector employers that do not select a plan on their own or through the NYC 401(k) Marketplace." (Pensions & Investments)
Merrill Lynch to End Commission-Based Options for Retirement Savers
"Merrill Lynch will no longer give retirement savers the option of paying a commission for trades, a wholesale exit from the traditional Wall Street sales model in accounts that stand to be affected by new conflict-of-interest rules on retirement accounts.... [W]hen the new rules take effect, investors who want a retirement account at Merrill will need to pay a fee based on a percentage of their assets, instead of having the option of being charged for each transaction made in their account." (The Wall Street Journal; subscription may be required)
Interesting Angles on the DOL's Fiduciary Rule, Part 22
"Based on the wording of the new fiduciary rule, if a bank employee recommends that an IRA invest in a certificate of deposit, and is compensated directly or indirectly for that recommendation, it is a fiduciary act for compensation. (The bonus, or bonus credit, is the compensation.) Since the bank employee is being paid compensation that is not stated and level, the payment is a prohibited transaction." (
[Guidance Overview] New IRS Procedure for Waiving the 60-Day Rollover Deadline
"The IRS increased the fee for certain private letter rulings (PLR) requests to $10,000 per application, effective February 1, 2016. This include PLR requests to waive the 60-day deadline for completing rollovers, which is a significant increase as the fees for such PLRs used to range from only $500-$3,000.... Fortunately, the IRS has issued new guidelines that now allow eligible individuals to avoid having to pay the $10,000 fee by using a new self-certification option." (Appleby Retirement Dictionary)
[Guidance Overview] DOL Finalizes Safe Harbor Rule on State-Sponsored IRAs
"While industry trade groups and others appear to generally applaud and support the fact that the final rule expands access to workplace retirement savings programs, some continue to be concerned about the fact that it creates favorable standards for payroll deduction IRA programs administered by a state, over those administered by private sector providers outside a state program. This appears particularly illogical to some because it fails to take advantage of the private sector's substantial experience in administering and distributing IRA products, and infrastructure it already has in place to meet both the state's and the DOL's goal of encouraging wide-spread and greater savings for retirement." (Trucker Huss)
Senate Finance Committee Approves Bipartisan Pension Bills (PDF)
"[The Retirement Enhancement and Savings Act of 2016 (RESA) would].... [1] permit unrelated employers ... to pool their resources by participating in a new type of multiple employer plan, provided certain conditions are met.... [2] require employers to provide defined contribution plan participants with an estimate of the amount of monthly annuity income the participant's balance could produce in retirement ... . [3] create a new fiduciary safe harbor for employers who opt to include a lifetime income investment option in their defined contribution plan.... [4] allow earnings on elective deferrals, qualified non-elective contributions and qualified matching contributions under a 401(k) plan to be distributed on account of hardship.... [5] increase the penalties for failing to file a Form 5500 and failing to provide a required withholding notice to $100 per day[.]" (Groom Law Group)
DOL Rule Could Reduce IRA Rollovers
"Nearly half of projected [IRA] rollover assets are 'at-risk' of remaining in the defined contribution plan-sponsor market once the [DOL's] fiduciary rule goes into effect, a new report claims. Assets that don't roll over into retail IRA accounts, a transaction considered a big cross-selling opportunity for retirement advisors, would cut into revenues generated by financial advisors since fewer dollars are 'in motion.' +" (
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 21
"[T]he DOL has historically taken the position that a prudent process for advice to retirement plans must be documented. That could easily be extended to advice to IRAs as well. In fact, there is a specific documentation retention requirement under BICE. Second, there is an argument that, if a fiduciary adviser cannot obtain -- through the investigation -- enough information to formulate a prudent recommendation, the adviser needs to abstain from making a recommendation." (
Reality Sets In: How New Fiduciary Rule Impacts 401(k)/IRA Providers and Retirement Savers
"For many, especially those already leading with the fiduciary mantle, the new Rule also offers new opportunities. This could add considerable value to retirement savers impacted by the Rule. For all the disquiet associated with changed providers, they may end up in a far better situation than when they started, according to those practitioners who responded to our interview queries." (Fiduciary News)
Will the DOL Fiduciary Rule Be the End of Solicitor Arrangements?
"IRA assets held by a Broker-Dealer (B-D) range between 40 and 80% of B-D total assets. However, many of these [financial advisors] know very little about ERISA fiduciary standard of conduct. This lack of knowledge increases B-D litigation risk as tens of thousands of misguided fiduciary missiles seek to secure new engagements or service existing clients. B-Ds will have to establish new training protocols in conjunction with compliance oversight to mitigate this risk." (Fiduciary Matters Blog)
Retirement Assets Total $24.5 Trillion in Second Quarter 2016
"Retirement assets accounted for 34 percent of all household financial assets in the United States at the end of the second quarter of 2016.... Assets in individual retirement accounts (IRAs) totaled $7.5 trillion at the end of the second quarter of 2016, an increase of 1.7 percent from the end of the first quarter. Defined contribution (DC) plan assets rose 2.1 percent in the second quarter of 2016 to $7.0 trillion." (Investment Company Institute [ICI])
[Guidance Overview] Charity is Exception to 'Contingent Right', Making Trust a 'Qualified Beneficiary'
"When a trust is named as the beneficiary of an IRA, it must a qualified 'see-through' trust (qualified trust) in order to allow for extended distributions based on the trust beneficiary's life expectancy. Despite best efforts, some trusts fail to meet the requirements to be a qualified trust; and even experts in the field sometimes make incorrect determinations as to the qualified status of a trust." (Appleby Retirement Dictionary)
Unintended Tax Consequences from Mishandling of an Inherited IRA: A Case Study
"Ultimately, retirement account owners will be responsible for paying any income tax due on distributions that they take from their retirement accounts, whether or not those distributions are shared with others.... For those who want to share inherited accounts with others, strategies can be implemented to ensure that any tax burden is also shared." (Appleby Retirement Dictionary)
Why You Should Roll Your 401(k) to Your New Employer
"Many 401(k) plans offer participants access to institutional share class mutual funds and very low cost index funds, especially those sponsored by large employers.... Balances in retirement plans, such as 401(ks), are protected against civil judgments and bankruptcy.... [D]epending on where you live, your state may not extend that protection to IRAs.... Many 401(k) plans permit participants to borrow from their plan assets at a very low rate of interest." (Financial Finesse)
[Guidance Overview] Missed a 60-Day Rollover? Try Self-Certification
"Plan administrators and IRA custodians are not required to accept the self-certification and ... many of the larger institutions [may] continue to insist upon a private letter ruling.... [T]he IRS itself has cautioned that self-certification is not the equivalent of a waiver of the 60-day requirement." (Fox Rothschild LLP)
SEC Provides Free Online Financial Planning Tools
Tools at the SEC's web site include: 401(k) and IRA Minimum Distribution Calculator; Compound Interest Calculator and Savings Goal Calculator; Social Security Retirement Estimator; Retirement Ballpark Estimator; Mutual Fund Analyzer; 529 Expense Analyzer; and a link to a searchable database of investment advisers who have filed Form ADV. (U.S. Securities and Exchange Commission)
Almost Half of Projected IRA Rollover Assets 'At-Risk' Post-DOL Conflict of Interest Rule
"New research ... suggests more assets in the retirement industry will remain in employer-sponsored DC plans following implementation of the rule.... 29% of respondents said they rolled over their retirement savings from an employer-sponsored account into an IRA because of advice from a financial professional. Another 29% consolidated their retirement savings into an existing IRA." (planadviser)
Proposal Would Crack Down on Tax Avoidance in Retirement Plans, Create New Opportunities for Working Americans to Save
"In addition to cracking down on 'mega Roth IRAs,' the draft proposal would: [1] Allow employers to make 'matching' contributions to a 401(k) retirement plan while their employees make student loan repayments.... [2] Eliminate Roth conversions for both IRAs and employer-sponsored plans ... [3] Eliminate 'stretch IRAs' ... [4] Gradually increase the age at which retirement plan participants are required to begin taking distributions from their accounts.... [This] discussion draft ... is being circulated to stakeholders, members of Congress, federal officials and others for review and comment." [Also available: a one-page summary of the legislative proposal, a longer summary; full legislative text, and a Joint Committee on Taxation technical explanation.] (Committee on Finance, U.S. Senate)
Ten Important Facts About IRAs (PDF)
14 pages. "[1] IRAs are the largest pool of assets in the U.S. retirement market.... [2] The incidence of IRA ownership increases with age.... [3] IRAs are predominantly held by moderate-income households.... [4] IRA balances tend to rise with length of ownership.... [5] Equity holdings figure prominently in traditional IRA investments.... [6] Although few traditional IRA investors make contributions, those who do display persistence.... [7] Rollovers from employer-sponsored retirement plans have fueled growth in IRAs.... [8] A large majority of individuals consult a financial professional when rolling over assets to a traditional IRA from a former employer's retirement plan.... [9] Most IRA owners consult a financial professional when creating a retirement strategy.... [10] IRA withdrawals are infrequent and mostly retirement related[.]" (Investment Company Institute [ICI])
[Guidance Overview] IRS Allows 'Self-Service' 60-Day Rollover Waivers for Retirement Plan Distributions (PDF)
"If an indirect rollover does not occur within the required 60-day timeframe, IRS will now allow the affected individual to self-certify that they meet a 'hardship waiver' exception to the 60-day rule in a broad array of circumstances. Plan administrators and IRA trustees can then rely on the self-certification in deciding whether to accept a rollover contribution after the 60-day period ends." (Xerox HR Services)
Interesting Angles on the DOL's Fiduciary Rule, Part 17
"While there could be a number of ways of satisfying the requirements, ... one way -- and probably a good way -- is to have procedures, forms and services for gathering and evaluating the information and for documenting why the analysis of that information results in a recommendation that the transfer (or not transferring) is in the best interest of the IRA owner. Also, while BICE does not specifically discuss the analysis that needs to be made if the adviser will not be providing 'Level Fee Fiduciary' advice to the IRA, the logical conclusion would be that the requirements are the same[.]" (
[Official Guidance] Text of IRS Ann. 2016-30: Relief for Victims of Louisiana Storms (PDF)
"This announcement provides relief to taxpayers who have been adversely affected by the recent storms and flooding in Louisiana that began August 11, 2016, (Louisiana Storms) and who have retirement assets in qualified employer plans that they would like to use to alleviate hardships caused by the Louisiana Storms. In addition, this announcement provides relief from certain verification procedures that may be required under retirement plans with respect to loans and hardship distributions.... The parishes included in the covered disaster area for the Louisiana Storms are identified in the News Release issued by the IRS for victims of the storms and flooding in Louisiana ... Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and the distribution is treated as a hardship distribution for all purposes under the Code and regulations." (Internal Revenue Service [IRS])
[Guidance Overview] Text of IRS IR-2016-115: Retirement Plans Can Make Loans, Hardship Distributions to Louisiana Flood Victims (PDF)
"Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures." (Internal Revenue Service [IRS])
[Guidance Overview] Retirement Plan Rollover Rules Relaxed: The 'I Lost It' Excuse May Actually Work
"An automatic waiver is of limited application as it only applies in a direct rollover scenario where the new plan or financial institution receives the funds before the end of the 60-day rollover period but fails to deposit them into a plan or IRA within the 60-day period due to no error of the participant. In this situation, the funds must actually be deposited into the plan or IRA within one year from the beginning of the 60-day rollover period.... Apparently appreciating the commonplace issues that arise with rollovers and seeking to avoid unintended 'leakage' of retirement plan assets from retirement vehicles for those that do not have the time or financial resources to pursue a PLR ... [Rev. Proc. 2016-47] provides taxpayers with a new mechanism to facilitate a rollover, even if a technical failure to comply with the 60-day rule has occurred." (Michael Best & Friedrich LLP)
2014 Update of the EBRI IRA Database: IRA Balances, Contributions, Rollovers, Withdrawals, and Asset Allocation (PDF)
"The average IRA account balance in the database was slightly more than $100,000 and the average IRA individual balance was $127,583, but the balances varied significantly by the IRA type: Roth IRAs had the lowest average balance, while Traditional IRAs had the highest average balance.... Roth IRAs were more likely to receive a contribution than Traditional IRAs (25.9 percent vs. 6.4 percent).... Almost 24 percent of individuals owning a Traditional or Roth IRA took a withdrawal in 2014, including 27.2 percent of Traditional IRA owners." (Employee Benefit Research Institute [EBRI])
[Guidance Overview] IRS Releases Self-Certification Procedure for Late IRA Rollovers
"In many cases, taxpayers should consider using a direct rollover from an employer plan or trustee-to-trustee transfer from an IRA to avoid any chance for missing the 60-day rollover window and to avoid withholding on the distribution. In addition, taxpayers should note that self-certification is not an automatic waiver of the 60-day window from the IRS; the issue may still be adjusted upon an IRS audit if the IRS finds incorrect information or disagrees with the facts supplied in the self-certification statement." (RSM US)
[Guidance Overview] IRS Finds Charity Is Exception to 'Contingent Right', Making Trust a 'Qualified Beneficiary'
"When there are multiple beneficiaries of a trust, the beneficiary with the shortest life expectancy is used for purposes of calculating RMDs. Only a primary or contingent beneficiary is considered ... In [a recent Private Letter Ruling], the IRS determined that [the named] charitable organizations fall under that exception, because they could become beneficiaries only if all the other beneficiaries in the other classes died before the assets were fully distributed. As such, the charitable organizations ... are 'mere successor beneficiaries'[.]" (Appleby Retirement Dictionary)
[Guidance Overview] IRS Allows Self-Certification for Late Rollovers of Retirement Plan Funds
"To qualify for this relief, the IRS cannot have previously denied relief to the taxpayer for that rollover, and the taxpayer must have missed the 60-day deadline for one of [11 specified reasons] ... According to the IRS, the taxpayer's self-certification is not a waiver of the 60-day requirement because the IRS can still deny the waiver on audit if it determines the taxpayer did not meet the requirements." (Journal of Accountancy)
[Official Guidance] Text of IRS Rev. Proc. 2016-47: Waiver of 60-Day Rollover Requirement (PDF)
"This revenue procedure provides guidance concerning waivers of the 60-day rollover requirement contained in sections 402(c)(3) and 408(d)(3) of the Internal Revenue Code. Specifically, it provides for a self-certification procedure (subject to verification on audit) that may be used by a taxpayer claiming eligibility for a waiver under Sections 402(c)(3)(B) or 408(d)(3)(I) with respect to a rollover into a plan or individual retirement arrangement (IRA). It provides that a plan administrator, or an IRA trustee, custodian, or issuer ... may rely on the certification in accepting and reporting receipt of a rollover contribution. It also modifies Rev. Proc. 2003-16 ... by providing that the [IRS] may grant a waiver during an examination of the taxpayer's income tax return. An appendix contains a model letter that may be used for self-certification." (Internal Revenue Service [IRS])
[Guidance Overview] Text of IRS News Release: New Procedure Helps People Making IRA and Retirement Plan Rollovers (PDF)
"Normally, an eligible distribution from an IRA or workplace retirement plan can only qualify for tax-free rollover treatment if it is contributed to another IRA or workplace plan by the 60th day after it was received. In most cases, taxpayers who fail to meet the time limit could only obtain a waiver by requesting a private letter ruling from the IRS. A taxpayer who missed the time limit will now ordinarily qualify for a waiver if one or more of 11 circumstances, listed in the revenue procedure, apply to them." (Internal Revenue Service [IRS])
Uber Drivers Aren't Employees, But They Have a Retirement Plan
"They may not have a 401(k) plan, but drivers working through Uber Technologies Inc.'s platform will soon be able to open a retirement account right in the app.... While fighting a pitched court battle to prevent drivers from being classified as employees, Uber has simultaneously joined forces with Betterment LLC ... to offer them IRAs.... [T]he option will be fee-free for the first year." (Bloomberg)
Why You Should Do An IRA Rollover When You Leave Your Job
"If you keep your money in an old employer's 401(k) plan, you will continue to be limited to the 10 to 15 funds it has selected for you. These funds may not be top-performing funds, and they may have higher-than-average fees.... In many 401(k) plans, roughly half of the options available are target-date funds, which can come with extra fees." (NerdWallet, via Nasdaq)
Advisors Cry Foul Over State Mandated Auto-IRAs
"In some states, the government is positioned to play the role of financial advisor within state administered auto-IRA programs and it's not just trade associations that are concerned. Financial advisors question what a state run automatic-IRA retirement plan might turn into in the long run." (
Qualified Charitable Distributions Can Ease the Tax Pain of RMDs
"Non-itemizers will get a tax benefit of reduced AGI from a donation that they otherwise wouldn't deduct. Itemizers will forgo the charitable deduction but may benefit from a lower AGI; QCDs might reduce the bite of the itemized deduction phase-out for high-income clients[.]" (On Wall Street)
DOL's Fiduciary Rule Poses New Litigation Threat to IRA Advice
"[P]laintiffs' lawyers and the courts have acknowledged that seemingly small differentials between share classes can have a meaningful impact on prospective-retirees' savings. The lesson to fiduciaries is that no fiduciary decision is insignificant and decisions should be reevaluated regularly as the clients' needs change.... Applying general best practices isn't enough -- advisors must have a holistic approach and take a look at their client's unique circumstances to determine any particular or customized needs." (Manning & Napier)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 15
"Since a pure level fee, or non-conflicted, adviser won't commit a prohibited transaction and therefore won't need an exemption, that adviser will not be bound by the best interest standard for investment advice to individual IRAs. Instead, the adviser will only be subject to the conduct standards in the securities laws.... The biggest [exception] is a recommendation to a plan participant to take a distribution and roll over to an IRA with the adviser." (
Rolling Over a 401(k) Distribution Has Potential Pitfalls
"If you can leave your money in the 401(k), it might make sense to do so. For example, your 401(k) plan might have an excellent investment choice that you cannot buy in your IRA. Or, your new employer might have a 401(k) plan with excellent investment choices and options that you will be able to roll your old 401(k) into. However, your IRA might have more flexible distribution and investment options." (Union Leader)
Clear Link Between Traditional IRAs and Rollovers
"Two new reports published by the Investment Company Institute (ICI) demonstrate that withdrawal activity is lower, equity holdings are higher, and investors tend to be younger in Roth [IRAs] than in traditional IRAs.... [At] year-end 2014, 31% of Roth IRA investors were younger than 40, compared with just 15% of traditional IRA investors." (planadviser)

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