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We are transferring the account as is in the name of the decesed for the benefit of the existing beneficiary. The new custodian needs to work out the issues. We are not attempting to transfer it to the spouse of the beneficiary. The parties should seek professional tax advice.

I cut and pasted it to an e-mail and the spell check went crazy!!

2006 Instructions for 1040 Lines 15 A & 15 B and 1040A Instructions for Lines 11A & 11B include instructions for Qualified Charitable Distributions (QCD).

Thanks for reposting WDIK These should be every day thoughts.

No Diminimis to my knowledge. Can you talk your client into taking it all?

Your conversion is less than 5 years old and you are under 591/2. YOur withdrawal will not be taxable but it will be subject to the 10% premature distribution penalty.

IMHO the plan document rules. If parents disclaim then the estate would be the default beneficiary. There may be other opinions on this matter.

If over 70 1/2 and can take a distribution, Direct Roll to IRA then gift to charity under PPA rules.

See Bird's responses. They may always take more. They just MUST take the minimum. That satisfies the "at least as rapidly rule" Starting next year they could transfer (direct rollover) to an inherited IRA in the name of the deceased for their benefit. They stilll must take the minimum however and they may not make any other contributions to the account.

Potential 50% penalty to the participant. The IRS has the authority to waive the penalty depending on facts & circumstances. Potential disqualification of the plan if found to be an ongoing issue or an intentional disregard for the regulations. It may be an EPCRS issue. I'm not sure if eligible for self-correction. There are more knowledgable people on the board that can answer that issue.

Thanks Appleby, Fortunately, the ex-spouse is establishing the account at another custodian. We have told our client that we will transfer the account to an inherited IRA in his name at the other custodian and they can handle the issue. Not that we're backing away from the issue but there just isn't any guidance out there and we don't want to subject our account owner additional cost from our side.

Account owner is a Individual who has inherited an IRA as a non-spouse beneficiary. Ex spouse has been granted a poriton of the IRA pursuant to Divorce Decree. Account owner and ex-spouse are requesting a transfer incident to divorce under 408(d)(6). Possible?? If so, how is new account plated as the ex-spouse is not the true beneficiary. I've been doing this since before ERISA (yes I'm that old) and this is the first time I've seen this.

AS stated in IRC Sec 408(p)(1)(B) 408(p) SIMPLE RETIREMENT ACCOUNTS. -- 408(p)(1) IN GENERAL. --For purposes of this title, the term "simple retirement account" means an individual retirement plan (as defined in section 7701(a)(37)) -- 408(p)(1)(A) with respect to which the requirements of paragraphs (3), (4), and (5) are met; and 408(p)(1)(B) with respect to which the only contributions allowed are contributions under a qualified salary reduction arrangement.

Check the hierarchy of beneficiaries in the plan language. Generally the contingent beneficiary has no rights if the primary beneficiary is alive at the time of the original account owner's death.(But not always) The plan language should determine who gets the benefit. Also, check the simultaneous death statute in the state. If its determined that they died at the same time then the primary would generally be deemed to die prior to the account owner. Again, check the plan language first.

My understanding is yes it is if he is over 70 1/2. See below for excerpts from RMD regs. (b) Distribution calendar year. A calendar year for which a minimum distribution is required is a distribution calendar year. If an employee's required beginning date is April 1 of the calendar year following the calendar year in which the employee attains age 70½ , the employee's first distribution calendar year is the year the employee attains age 70½. If an employee's required beginning date is April 1 of the calendar year following the calendar year in which the employee retires, the employee's first distribution calendar year is the calendar year in which the employee retires In the case of distributions to be made in accordance with the life expectancy rule in §1.401(a)(9)-3 and in section 401(a)(9)(B)(iii) and (iv), the first distribution calendar year is the calendar year containing the date described in A-3(a) or A-3(b) of §1.401(a)(9)-3, whichever is applicable. Q-2. For purposes of section 401(a)(9)©, what does the term required beginning date mean? [69] 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 Q-4. Must distributions made before the employee's required beginning date satisfy section 401(a)(9)? A-4. Lifetime distributions made before the employee's required beginning date for calendar years before the employee's first distribution calendar year, as defined in A-1(b) of §1.401(a)(9)-5, need not be made in accordance with section 401(a)(9). However, if distributions commence before the employee's required beginning date under a particular distribution option, such as in the form of an annuity, the distribution option fails to satisfy section 401(a)(9) at the time distributions commence if, under terms of the particular distribution option, distributions to be made for the employee's first distribution calendar year or any subsequent distribution calendar year will fail to satisfy section 401(a)(9). [

IMHO it will take a technical correction or at the very least a modification of the 401(a)(9) regs however (and as a local Denver Radio Talk Show Host says, "There is always a However") this is only a two year allowance. (18 mos actually) the IRS is so busy they probably won't get to it until this is all over. Also, the 1099R & 5498 instructions that were recently modified do not address this issue. My sources have told us that this type of distribution will be reported as a normal distribution andit will be up to the IRA account owner to justify the distribution similar to a rollover ( Lines 16a & 16b on the 1040) on his/her tax return. Again, this is only my opinion and the dots are still uunconnected.

A SIMPLE IA may be the only active plan offered by an employer. The SIMPLE IRA replaced the SARSEP about 10 years ago however a SARSEP may still be operated if it had been in existance at the time and new participants may still be added. Just no new SARSEPS may be established. I don't see the point for continuing both even if you could. The SIMPLE IRA will acheive the same result generally speaking.

Form 8606 is used to determine the taxable & non-taxable portions of IRA distributions when After Tax ( non-deductible) contributions have been made. See forms & Instructions site HERE and choose form 8606 & also instructions (listed separately) also Publications IRS Pubs and choose Pub 590 for more information. I agree with namealreadyinuse. Find another advisor.

Not until 2008. PPA will allow for plan years after 2007. Until then, you must rollover to a traditional IRA and then convert to a ROTH IRA. You also need a distribution event from the 401(k)>

Although charitable contributioins will be allowed from a ROTH IRA, only taxable amounts will be allowed as a qualified contribution. The ordering rules for ROTH still apply and therefore all non-taxable amounts would need to be withdrawn from the ROTH IRA Since this is only for account owners 70 1/2 and older all distributions would be tax free except earnings on contributions where the account or the conversion was less than 5 years old. Hardly seems worth it unless the intent is to close the ROTH this year or next.

If its Rollover eligible, then its subject to mandatory 20% withholding and it complicates the rollover process. Better to do a direct rollover and then use the 60 rollover window from a distribution out of the IRA. I can't address the trustee issue. I would assume that if there is a distribution event under the plan, then it would be ok. There are others on this board that may be able to address that issue.

RMD REGS HERE Here is an excerpt from the preamble to the final regulations. Default Rule for Post-death Distributions These regulations, as did the 2001 proposed regulations, provide that, if an employee dies before the employee's required beginning date and the employee has a designated beneficiary, then the life expectancy rule in section 401(a)(9)(B)(iii) (rather than the 5-year rule in section 401(a)(9)(B)(ii)) is the default distribution rule. Thus, absent a plan provision or election of the 5-year rule, the life expectancy rule applies in all cases in which the employee has a designated beneficiary, and the 5-year rule applies if the employee does not have a designated beneficiary [and dies prior to the RBD]. This is a change from the position in the 1987 proposed regulations that provided the 5-year rule as the default unless the spouse was the sole beneficiary. Commentators pointed out that, as a result of the default rule under the 1987 regulations, some beneficiaries did not commence distributions under the life expectancy rules. In response to those comments, these final regulations provide a transition rule that permits beneficiaries subject to the 5-year rule under the 1987 proposed regulations to switch to the life expectancy rule, provided that all amounts that would have been required to be distributed under an application of the life expectancy rule are distributed by the earlier of December 31, 2003 or the end of the 5-year period following the year of the employee's death. It would appear that the beneficiaries might still have the option for the life expectancy payout but would be subject to the 50% penalty for the amounts not previously taken. It woould depend on the numbers as to which choice is most advantageous. Here are Noel Ice's annotated regs. See above Messed placement of URL. Also Single Life expectancy at age 60 = 25.2 (Age of oldest beneficiary in year of death) or 27 yrs at age 58 ( unclear if age 60 is now ) subtract one year each year thereafter, determine RMD and 50% penalty. THe numbers may work out better to take L.E. payout and pay penalty. Also the IRS has the authority to waive the penalty on a facts and circumstances basis. (Tear stained letter).

On an ACH that we send to a Bank, we give them our account information with the for "Further credit information". we send a test and the bank confirms it. Its what happens when someone sets up an automatic bill pay. Etc. IRS Form 8888 doesn't allow for the additional information to get the deposit to the clients account with us. It only provides enough information to get it to our account with our bank. e-mail me with any thing you find out.

Just a question for those of you in the independent trust or mutual fund business. If you are not a bank and don't have your own routing number how can you receive those contributions if the only information the form provides is your banks rouoting number and "YOUR" account at the bank. How do you get further credit to your client's account. If have more than one account for the client (multiple IRAs ROTH or Traditional etc) how do you determine which account even if the bank provides you with a SSN & Name (if they can). Most wires are sent with a Bank routing number,your bank account number and an accoount number "for further credit" to the account owner. This form is great for commericial banks and Savings banks but not so for third party trustees and custodians. Any Comments?? Thanks for any input I Know we can set up ACH deposits from the account owners bank to our account but we control the information on those transactions. We can't control the informatiion received on the IRS wire. Please send comments to the IRS on this issue.

Just received this via e-mail. Issue Number: IR-2006-136 Inside This Issue -------------------------------------------------------------------------------- Delay in Effective Date for Regulations Under Section 403(b) WASHINGTON —The Internal Revenue Service announced today that the general effective date for the regulations regarding section 403(b) arrangements that were proposed in 2004 (including the related controlled group regulations under section 414©) will be extended. In order to provide employers, employees, insurance carriers, and mutual funds involved in section 403(b) arrangements a reasonable advance period before the regulations go into effect, the final regulations generally will not be effective earlier than January 1, 2008. Here is the actual link