austin3515

I guess like anything else, the less you deal with something, the more complicated it is. But I will say there do seem to be a lot of rules that appear at first glance to apply to the exact same situation (5 year rule, life expectancy, special rules for spouses, the list goes on).

How I wish that was true... I can't seem to get my hands around these rmd's right around the date of death... So the play here then is 1) leave in the plan for 4 years OR roll to an inherrited IRA for 4 Years (electing the 5 year rule) 2) Roll to an IRA and elect to treat it as her own to switch back to the uniform life? I guess that was the conclusion in the last thread, it just seems like such a loophole...

We elected the "5 Yeear Rule" in the adoption agreement for RMD's after death, but before distributions begin. Participant dies, spouse is sole designated beneficiary. Particiapnt turned 70.5 in 2009 which was the year of death. So a) Does the 5 year rule apply, because he died before his distriubtions began? OR b) Will the beneficiary (who is basically the same age) be required to begin taking distributions by 12/31/2010 (12/31 following end of year of death). I know the participant can roll it to an IRA, etc.,, but before she rolls it over, the question is do I need to do an RMD using the single life table.

Got a primary residence loan where the orignal term was 15 years. Currently, the loan will be fully repaid in 6 years. Is there any reason that this loan cannot be refinanced into a signle loan, repaid in 5 years, together with receiving additional proceeds of $X? Great West is saying we can't., but I don't believe them!

I would make the extension to the first business day following the extended due date, and file by that date. In this case, that would be the Tuesday after MLK day.

It's not a bonus. It's paid time off.

Check out this IRS web-page which I have found to be VERY well done and informativ. And Masteff is right (as if this obvious fact needs to be restated http://www.irs.gov/retirement/participant/...=188232,00.html

I keep telling my wife that an international man of mystery can't be tied down in this way, but she's still not buying it... OK, here's a doozy: Participant dies at the age of 69. Plan uses the 5 year year. Spouse is same age as participant and waits 4 years before closing the account. Is the spouse now able to roll it to her "own IRA" and essentially skip out on 3 years of RMD's? Anyone have a good recommendation for a book just on RMD's?

Thankl you masteff - I had missed or forgottern what you wrote earlier. So, would you agree that if a participant dies after payments begin and the beneficiary is the sole spouse, you should automatically tell the spouse/beneficiary to roll to an IRA and treat it as their own? Should this be like a "golden rule" of these types of rmd's.

But if she DID do that, does the table revert back to the uniform life? That's what I'm really struggling with, and yes it's a been a long RMD day for me. Seems everyone has had their own crazy situation...

I'm doing some more research on all of this and I'm fundung that a participant can roll their inherrited 401k into their an IRA and "treat it as their own." If this had been done, would she have been able to use the uniform life table as opposed to the single life table? What would have been the deadline for doing this? If the participant died over 2 years ago, would it still be an option?

But we're clear that when your spouse dies, your RMD's are essentially double what they would have been had he survived? So, my bigger question is, should I have told her roll over to an IRA? Or would the same rules apply?

5% owner dies after RBD (back in 2008), and his wife is the sole beneficiary. The wife is younger than the participant and as of December 31, 2010 is age 85. So do I go to the single life expectancy table and calcualte her minimum distriubtion as her 12/31/09 balance divided by 7.6?? Why is this factor SO much smaller than the regular RMD table which would call for a factor of 14.8??? Did I screw up by not telling her to roll to an IRA, where I presume she would have been subject to the regular rmd tables?

Got a 5% owner participant who turned 70.5 in May 2010. He will be selling his ownership interest in the next week or so. Is he required to take a minimum distriubtion? It becomes a critical question since I've learned once you're treated as passing your RBD as a 5% owner, you are alwasy considered a 5% owner. And his RMD's are a lot... All I can find is references to be a 5% owner "for the plan year" What I've found so far. It doesn't seem to say "at any time during the year" anywhere: 1.401(a)(9)-2 A-2©: © For purposes of section 401(a)(9), a 5-percent owner is an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 701/2. 416(i)(B) (B) Percentage owners (i) 5-percent owner For purposes of this paragraph, the term “5-percent owner” means— <A name=i_1_B_i_I>(I) if the employer is a corporation, any person who owns (or is considered as owning within the meaning of section 318) more than 5 percent of the outstanding stock of the corporation or stock possessing more than 5 percent of the total combined voting power of all stock of the corporation, or http://' target="_blank">(II) if the employer is not a corporation, any person who owns more than 5 percent of the capital or profits interest in the employer

Box 14A (earnings from self employment), less any 179 is the starting point. Box 14A is generally guaranteed payments plus ordinary income.

IRS Announces Pension Plan Limitations for 2011 IR-2010-108, Oct. 28, 2010 WASHINGTON -- The Internal Revenue Service today announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2011. In general, these limits will either remain unchanged, or the inflation adjustments for 2011 will be small. Highlights include: The elective deferral (contribution) limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government's Thrift Savings Plan remains unchanged at $16,500. The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500. The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $56,000 and $66,000, unchanged from 2010. For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $90,000 to $110,000, up from $89,000 to $109,000. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple's income is between $169,000 and 179,000, up from $167,000 and $177,000. The AGI phase-out range for taxpayers making contributions to a Roth IRA is $169,000 to 179,000 for married couples filing jointly, up from $167,000 to $177,000 in 2010. For singles and heads of household, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000. The AGI limit for the saver's credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $56,500 for married couples filing jointly, up from $55,500 in 2010; $42,375 for heads of household, up from $41,625; and $28,250 for married individuals filing separately and for singles, up from $27,750. Below are details on both the unchanged and adjusted limitations. Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Commissioner annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act. The limitations that are adjusted by reference to Section 415(d) generally will remain unchanged for 2011. This is because the cost-of-living index for the quarter ended September 30, 2010, while greater than the cost-of-living index for the quarter ended September 30, 2009, is less than the cost-of-living index for the quarter ended September 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) will be $16,500 for 2011, which is the same amount as for 2009 and 2010. This limitation affects elective deferrals to Section 401(k) plans, Section 403(b) plans, and the Federal Government's Thrift Savings Plan. Effective January 1, 2011, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) remains unchanged at $195,000. Pursuant to section 1.415(d)-1(a)(2)(ii) of the Income Tax Regulations, the adjustment to the limitation under a defined benefit plan under section 415(b)(1)(B) is determined using a special rule that takes into account that the cost-of-living indexes for the quarter ended September 30, 2009, and for the quarter ended September 30, 2010, were both less than the cost-of-living index for the quarter ended September 30, 2008, and that the cost-of-living index for the quarter ended September 30, 2010, is greater than the cost-of-living index for the quarter ended September 30, 2009. For a participant who separated from service before January 1, 2010, the participant's limitation under a defined benefit plan under section 415(b)(1)(B) is unchanged (i.e., the adjustment factor is 1.0000). For a participant who separated from service during 2010, the limitation under a defined benefit plan under Section 415(b)(1)(B) for 2011 is computed by multiplying the participant's 2010 compensation limitation by 1.0118 in order to reflect changes in the cost-of-living index from the quarter ended September 30, 2009, to the quarter ended September 30, 2010. The limitation for defined contribution plans under Section 415©(1)(A) remains unchanged for 2011 at $49,000. The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2011 are as follows: The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $16,500. The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)©, and 408(k)(6)(D)(ii) remains unchanged at $245,000. The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $160,000. The dollar amount under Section 409(o)(1)©(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period remains unchanged at $985,000, while the dollar amount used to determine the lengthening of the 5-year distribution period remains unchanged at $195,000. The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $110,000. The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $5,500. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $2,500. The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, remains unchanged at $360,000. The compensation amount under Section 408(k)(2)© regarding simplified employee pensions (SEPs) remains unchanged at $550. The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $11,500. The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $16,500. The compensation amounts under Section 1.61-21(f)(5)(i) of the Income Tax Regulations concerning the definition of "control employee" for fringe benefit valuation purposes remains unchanged at $95,000. The compensation amount under Section 1.61-21(f)(5)(iii) remains unchanged at $195,000. The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2011 are as follows: The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $33,500 to $34,000; the limitation under Section 25B(b)(1)(B) is increased from $36,000 to $36,500; and the limitation under Sections 25B(b)(1)© and 25B(b)(1)(D), is increased from $55,500 to $56,500. The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $25,125 to $25,500; the limitation under Section 25B(b)(1)(B) is increased from $27,000 to $27,375; and the limitation under Sections 25B(b)(1)© and 25B(b)(1)(D), is increased from $41,625 to $42,375. The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $16,750 to $17,000; the limitation under Section 25B(b)(1)(B) is increased from $18,000 to $18,250; and the limitation under Sections 25B(b)(1)© and 25B(b)(1)(D), is increased from $27,750 to $28,250. The deductible amount under § 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,000. The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $89,000 to $90,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) remains unchanged at $56,000. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $167,000 to $169,000. The adjusted gross income limitation under Section 408A©(3)©(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $167,000 to $169,000. The adjusted gross income limitation under Section 408A©(3)©(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $105,000 to $107,000. The dollar amount under Section 430©(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under section 430©(2)(D) has been made is increased from $1,000,000 to $1,014,000.

We use the Corbel 401k EGTRRA prototype. Got a person who became a 2% owner on 6/30/2009. He earned more than $150K in both 2008 and 2009. Client does not want to give the THM to the participant for the 2009 Plan Year. I know there are two schools of thought on whether or not he can be considered key for 2009 (a), consistent with TH Ratio determination, b) as of last day of applicable plan year). Has anyone ever gone over this before, specifically with the corbel document?

2.b. Are elective deferrals counted if they distributed to the key employee as a corrective distribution? Suppose a key employee is also a highly compensated employee (HCE) and, under the ADP nondiscrimination test applicable to the 401(k) plan, receives a refund of some of his or her elective deferrals. Should the refunded deferrals be counted in calculating the key employee's allocation rate to determine whether the top heavy minimum should be less than 3% of compensation? For example, suppose a key employee's compensation for the plan year is $200,000, and his elective deferrals total $10,000, but his corrective distribution returns $6,000 of those deferrals, leaving only $4,000 of the elective deferrals in the key employee's account. The key employee has no other allocations for the plan year other than investment earnings in his account. For purposes of the rule described in 2. above, is the key employee's allocation rate 5% (i.e., $10,000/$200,000) or 2% ($4,000/$200,000)? According to the IRS, the answer is 5%. See Q&A-29 of the IRS Q&A session held on October 25, 2004, in Washington, D.C. at the ASPPA Annual Conference. This conclusion is consistent with the general treatment that corrective distributions under the ADP test are still annual additions and are otherwise treated as part of an employee's accrued benefit. (edit: forgot to mention this is from the 2010 EOB)

Refundng 100% of the deferrals does not eliminate the THM. No cite for you, but did look it up once before when facing the same situation.

We use the same and are very very happy with it as well. One downside is that is very easy to forget to hit the Send Secure button. But it is possible to program outlook to warn you that the email has an attachment and are you sure you don't want to use leapfile? That's what I did. Kind of annoying that every time you send an attachment you get the message, but it beats sendign out a file with socials and DOB's unencryted without even a password by accident. Also note that Adobe pdf's can be encrypted at 128 bit which might be all the security you need.

I have to say every EFAST/IFILE experience I had went VERY smooth. The system simply worked the way it was supposed to. Plus, it was a single web-site which is inherrently simpler. I filed with about a dozen clients on it, and the invitiation system went very very smoothly. The emails always went out immediately. The filing received came back consistently AND immediately, even on October 14. The one thing I struggle with is managing the filing status of all of our plans. The single reason I'm torn from leaving a Relius Web Client type of platform is the report I get with the filing statuses. The only way it works is to print out the confirmation email for each one, and match it up against our client list for extensions, final checks, etc. Not totally out of the question, but still a good deal of extra work. The last downside is that when we are doing the filing for the clients, our owner's name shows up as the plan administrator in both columns so it looks like we're the plan administrator. No work around as of yet (per the DOL), but if they fix this, one more hurdle will be removed.

I actually just found an Example in the EOB that was spot on. The following is taken from the EOB: Example, only 1 NHC is actually deferring. Suppose in the original example that A is the only employee defers for the Plan Year. Under these facts, the entire mmatch allocate to A, regardless of the rate could be included because the representative matching rate is boaded on on the eligible NHC's who make elective deferrals and A is the only one who does. So now I'm pretty well convinced that this will work... (but please do let me know if you agree!!).

One NHCE deferring. 4 NHCE's total. Does that change things?

You can definitly still do the DFVC. We've done it after gettng that letter. I try to avoid getting that letter of course because you need to have them abate the penalty at this point (which they should do if you use DFVC, but of course there are no guarantees). And although I had to think about this after amending about 50 processing stopped's over the last 2 monhts, amending a plan with filing received is a perfectly normal thing since you're changing the way you checked the boxes. Trick: When responding to the IRS initial letter looking for the 5500, do NOT send a copy of the 5500. If you do, they automatically send it back with a template letter telling you you need to efile. I was told by the IRS that they won't even look at it.

I would also do two 2009 forms, primarily to faciliate the efiling. Interesting question. I suspect you realize your 5500 is late?