jevd

Just Google Real Estate IRA and you will get plenty of info. Here is some info from the IRAS FAQs on IRAs. Are there any restrictions on the things an IRA can be invested in? The law does not permit IRA funds to be invested in collectibles. If an IRA invests in collectibles, the amount invested is considered distributed in the year invested. The account owner may have to pay a 10% additional tax on early distributions. Here are some examples of collectibles: Artwork, Rugs, Antiques, Metals - there are exceptions for certain kinds of bullion, Gems, Stamps, Coins - there are exceptions for certain coins minted by the U.S. Treasury, Alcoholic beverages, and Certain other tangible personal property. Check Publication 590, Individual Retirement Arrangements (IRAs), for more information on collectibles. Finally, IRA trustees are permitted to impose additional restrictions on investments. For example, because of administrative burdens, many IRA trustees do not permit IRA owners to invest IRA funds in real estate. IRA law does not prohibit investing in real estate but trustees are not required to offer real estate as an option.

Just in case you haven't read the news items on Benefits Link here is the IRS Newsletter re: Clarifying Notice 2007-7 HERE

See article HERE Here is the text of the legislation. It appears that only Traditional IRAs are eligible for this one time transfer. Check with your tax professional or attorney. SEC. 307. ONE-TIME DISTRIBUTION FROM INDIVIDUAL RETIREMENT PLANS TO FUND HSAs. (a) In General- Subsection (d) of section 408 (relating to taxability of beneficiary of employees' trust) is amended by adding at the end the following new paragraph: `(9) DISTRIBUTION FOR HEALTH SAVINGS ACCOUNT FUNDING- `(A) IN GENERAL- In the case of an individual who is an eligible individual (as defined in section 223©) and who elects the application of this paragraph for a taxable year, gross income of the individual for the taxable year does not include a qualified HSA funding distribution to the extent such distribution is otherwise includible in gross income. `(B) QUALIFIED HSA FUNDING DISTRIBUTION- For purposes of this paragraph, the term `qualified HSA funding distribution' means a distribution from an individual retirement plan (other than a plan described in subsection (k) or (p)) of the employee to the extent that such distribution is contributed to the health savings account of the individual in a direct trustee-to-trustee transfer. `© LIMITATIONS- `(i) MAXIMUM DOLLAR LIMITATION- The amount excluded from gross income by subparagraph (A) shall not exceed the excess of-- `(I) the annual limitation under section 223(b) computed on the basis of the type of coverage under the high deductible health plan covering the individual at the time of the qualified HSA funding distribution, over `(II) in the case of a distribution described in clause (ii)(II), the amount of the earlier qualified HSA funding distribution. `(ii) ONE-TIME TRANSFER- `(I) IN GENERAL- Except as provided in subclause (II), an individual may make an election under subparagraph (A) only for one qualified HSA funding distribution during the lifetime of the individual. Such an election, once made, shall be irrevocable. `(II) CONVERSION FROM SELF-ONLY TO FAMILY COVERAGE- If a qualified HSA funding distribution is made during a month in a taxable year during which an individual has self-only coverage under a high deductible health plan as of the first day of the month, the individual may elect to make an additional qualified HSA funding distribution during a subsequent month in such taxable year during which the individual has family coverage under a high deductible health plan as of the first day of the subsequent month. `(D) FAILURE TO MAINTAIN HIGH DEDUCTIBLE HEALTH PLAN COVERAGE- `(i) IN GENERAL- If, at any time during the testing period, the individual is not an eligible individual, then the aggregate amount of all contributions to the health savings account of the individual made under subparagraph (A)-- `(I) shall be includible in the gross income of the individual for the taxable year in which occurs the first month in the testing period for which such individual is not an eligible individual, and `(II) the tax imposed by this chapter for any taxable year on the individual shall be increased by 10 percent of the amount which is so includible. `(ii) EXCEPTION FOR DISABILITY OR DEATH- Subclauses (I) and (II) of clause (i) shall not apply if the individual ceased to be an eligible individual by reason of the death of the individual or the individual becoming disabled (within the meaning of section 72(m)(7)). `(iii) TESTING PERIOD- The term `testing period' means the period beginning with the month in which the qualified HSA funding distribution is contributed to a health savings account and ending on the last day of the 12th month following such month. `(E) APPLICATION OF SECTION 72- Notwithstanding section 72, in determining the extent to which an amount is treated as otherwise includible in gross income for purposes of subparagraph (A), the aggregate amount distributed from an individual retirement plan shall be treated as includible in gross income to the extent that such amount does not exceed the aggregate amount which would have been so includible if all amounts from all individual retirement plans were distributed. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years.'. (b) Coordination With Limitation on Contributions to HSAs- Section 223(b)(4) (relating to coordination with other contributions) is amended by striking `and' at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting `, and', and by inserting after subparagraph (B) the following new subparagraph: `© the aggregate amount contributed to health savings accounts of such individual for such taxable year under section 408(d)(9) (and such amount shall not be allowed as a deduction under subsection (a)).'. © Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2006.

Thanks Belgarath for your informative discussion. I appreciate your professionalism. I agree this is probably the only case that will ever come up. regards.

414(v)(2)(B)(i) states: 414(v)(2)(B)(i) In the case of an applicable employer plan other than a plan described in section 401(k)(11) or 408(p) the applicable dollar amount shall be determined in accordance with the following table: Doesn't exception phrase apply? If it doesn't then I think its a mistake that hasn't been caught and the possibility of the situation existing is rare although apparently has occurred inthis case. That's my interpertation

I Still maintain that the catch-up limit is a deferral and the deferral limits are individual limits and therefore the SIMPLE catch up limit is $ 2,500.00. Please cite the specific section of this regulation that implies multiple plans of different employers allow for a SIMPLE Catch up contribution of more than $2,500.00

Do you have the citation? If so please post for our edification>

The 2006 & 2007 catch up limit is $2,500. Thats $ 2,500 per person regardless of the number of employers or plans. That is my understanding. The catch up contribution is an increase to the deferral limit which is an individual limit not a plan or employer limit.

Catch up contribuitions are on a taxpayer(individual) basis not plan.

Yes, Then potentially a 50% penalty could apply but the IRS has the authority to waive the penalty on a facts and circumstances basis depending on how the situation is corrected etc. How ever as this is the first year, there is no penalty applied until after 4/1/07. The plan could also be subject to operational failures as well.

The IRS doesn't care how its distributed, just that it is distributed. The Rollover rules then kick in and say you can't Roll an RMD. that's why I don't think the 50% penalty applies.

The trustee/plan administrator, should have known better and should have distributed the RMD separately. I still don't think the 50% penalty applies. The individual should remove the amount + earnings from the IRA and that should be the end of it. He/she will be due another RMD in 2007 from the IRA.

My understanding is that as long as the 1099R from the 401(k) indicates that it was withdrawn, then the RMD is satisfied. BTW was this a direct rollover or was the distribution received by the plan participant? I don't think it matters but that may be where the confusion is regarding the 1099R coding. Maybe someone else can chime in on the discussion with a different point of view. Ultimately the individual should get a professional's advice.

NO. The full amount was withdrawn from the 401(k) which satisfied the RMD. However the complete rollover created the excess in the IRA which needs to be corrected by tax filing date plus extensions to avoid the 6% excise tax penlty. An approved extension is not needed to make this correction.

The complete rollover created an excess contribution in the IRA for 2006 IN the amount of the RMD. The RMD Should have been retained before the rollover. It now must be removed as an Excess Plus earnings from the IRA before tax filing date for the year of the rollover.If removed after tax filing date + extensions, a 6% penalty will apply for each year it remains in the IRA. The 2006 1040 must be completed showing the RMD amount as taxable on line 16 b.

Required Beginning Date = 4-1-07 The later of 4-1- of the year participant turns 70 1/2 or retires from employer. FROM !.401(a)(9) 2.2 Q-2. For purposes of section 401(a)(9)©, what does the term required beginning date mean? A-2. (a) Except as provided in paragraph (b) of this A-2 with respect to a 5-percent owner, as defined in paragraph © of this A-2, the term required beginning date means April 1 of the calendar year following the later of the calendar year in which the employee attains age 70½ or the calendar year in which the employee retires from employment with the employer maintaining the plan. (b) In the case of an employee who is a 5-percent owner, the term required beginning date means April 1 of the calendar year following the calendar year in which the employee attains age 70½. © 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 70½. (d) Paragraph (b) of this A-2 does not apply in the case of a governmental plan (within the meaning of section 414(d)) or a church plan. For purposes of this paragraph, the term church plan means a plan maintained by a church for church employees, and the term church means any church (as defined in section 3121(w)(3)(A)) or qualified church-controlled organization (as defined in section 3121(w)(3)(B)). (e) A plan is permitted to provide that the required beginning date for purposes of section 401(a)(9) for all employees is April 1 of the calendar year following the calendar year in which an employee attains age 70½ regardless of whether the employee is a 5-percent owner Complete Regs HERE

Form 592 Here Calif. Tax Forms site Here Hope this works for you.

You haven't been taxed on your employer's contributions to Social Security

That certainly doesn't help us in the industry any when we need to refer someone to a publication and its out of date. How many times do you hear "Where does it say that in plain language"?

Allan If you have 2006 590, please send me the site as IRS Pub site still has only 2005 ver.

IR 2007-15 Here

Apparently this discussion has come up before. see: HERE

Facts: IRA account owner dies with an account balance and has named 3 beneficiaries. Do to the nature of the assets in the account all three file a disclaimer however it is more than 9 months after the date of death and does not qualify under IRC 2518. All are over age 21 etc. The terms of the plan document do not address non-qualified disclaimers. If qualified, the Estate of the deceased would be the default beneficiary. 1. Does the trustee/custodian honor the disclaimer & pay to the estate.? 2. if so, does this create a reportable (deemed) distribution to the donor ( disclaiming) beneficiaries and is a 1099R issued to them? 3. If and when a distribution to the estate occurs, what are the reporting requiremeents. 4. If a deemed distribution has occurred, does this create basis and how would it be reported by the estate? After 30 years plus in this business this is the first ine of these I've seen. Does anyone out there honor non-qualified disclaimers? Does the trustee/custodian just say NO? We can't force a distribution of an IRA.

Dave, The Avatars etc. were a fun touch but obviously not necessary. If the children out there can't act their age or the others that get some delight in hijacking the best benefits discussion in the nation/world then do what needs to be done. The legitimate posters & professionals that use this board will stand behind you 1000%. Thanks for all you do. JEVD

Testing New Avatar Obviously didn't work. Dave, Are the Gremlins from Bulgaria Back? ?????