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Just as an FYI, An IRA may not accept a participant loan as a rollover.

My understanding is that the new law allows for the non-spouse beneficiary to roll the plan assets into an inherited IRA and the current IRA regs apply. The account is considered an Inherited IRA and distribution rules apply depending on death before or after RBD.

Your money is probably in a money fund earning some nominal rate of interest. It is better to establish the habit and get started putting the $ into the ROTH. If you are disciplined enough to save the $ outside of the ROTH you still lose the tax advantage on the smalll amount of earnings on the money market account that may be tax free when you withdraw it much later on.

See IRS Publication 590 Page 60 & 61 for ROTH IRA distribution rules and ordering rules for withdrawals. Pub 590 is Here

I wasn't responsible for that one, but I have several stories previously posted regarding my aka.

ALl IRA payments since they are Demand Payments are considered non-periodic and are threfore subject to the 10% withholding rate; See 35-3405-1T Q & A F-15 below. F-15. Q. How is withholding applied to a designated distribution from an individual retirement account (IRA) described in section 408(a) that is payable upon demand even though payments are scheduled to be made over a period certain greater than one year? A. Distributions from IRAs that are payable upon demand are not periodic payments taxable under section 72 because they do not constitute annuity contracts within the meaning of section 408(d)(2). Therefore, designated distributions from an IRA that are payable upon demand are treated as nonperiodic distributions subject to withholding at the 10% rate even if the distributions are paid over a period certain

One Hundred Years Ago 1906!! I received this in an e-mail today. Show this to your children and grandchildren ?? THE YEAR 1906?? This will boggle your mind, I know it did mine! The year is 1906. One hundred years ago. What a difference a century makes! Here are some of the U.S. statistics for the Year 1906 : ************************************ The average life expectancy in the U.S. was 47 years. Only 14 percent of the homes in the U.S. had a bathtub. Only 8 percent of the homes had a telephone. A three-minute call from Denver to New York City cost eleven dollars. There were only 8,000 cars in the U.S., and only 144 miles of paved roads. The maximum speed limit in most cities was 10 mph. Alabama, Mississippi, Iowa, and Tennessee were each more heavily populated than California. With a mere 1.4 million people, California was only the 21st most populous state in the Union. The tallest structure in the world was the Eiffel Tower! The average wage in the U.S. was 22 cents per hour. The average U.S. worker made between $200 and $400 per year . A competent accountant could expect to earn $2000 per year, a dentist $2,500 per year, a veterinarian between $1,500 and $4,000 per year, and a mechanical engineer about $5,000 per year. More than 95 percent of all births in the U.S. took place at HOME . Ninety percent of all U.S. doctors had NO COLLEGE EDUCATION! Instead, they attended so-called medical schools, many of which were condemned in the press AND the government as "substandard." Sugar cost four cents a pound. Eggs were fourteen cents a dozen. Coffee was fifteen cents a pound. Most women only washed their hair once a month, and used borax or egg yolks for shampoo. Canada passed a law that prohibited poor people from entering into their country for any reason. Five leading causes of death in the U.S. were: 1. Pneumonia and influenza 2. Tuberculosis 3. Diarrhea 4. Heart disease 5. Stroke The American flag had 45 stars. Arizona, Oklahoma, New Mexico, Hawaii, and Alaska hadn't been admitted to the Union yet. The population of Las Vegas, Nevada, was only 30!!!! Crossword puzzles, canned beer, and ice tea hadn't been invented yet. There was no Mother's Day or Father's Day. Two out of every 10 U.S. adults couldn't read or write. Only 6 percent of all Americans had graduated from high school. Eighteen percent of households in the U.S. had at least one full-time servant or domestic help. There were about 230 reported murders in the ENTIRE ! U.S.A. ! Now I forwarded this from someone else without typing it myself, and sent it to you and others all over the United States, possibly the world, in a matter of seconds! Try to imagine what it may be like in another 100 years.

To the Accountants oout there. What offsets would over ride the taxation of the distribution. This seems like a sales pitch without disclosure to me.

It appears that the OUTSIDE method involves distributions from the IRA with some sort of tax offset created by the Real Estate transaction. I had to dig through all of the material to finally find a statement to that effect. I'm not a CPA so I'm not sure if it's legit but there is never any free lunch. Even if mom makes it.

For those of you who don't check the benefits news portion of the site first, check out the links regarding 5500s. Changes Changes Changes & Electronic Filing Requirement.

The bullet on the instructions just says its nolonger required. No further explanation.

The instructions to the 2006 5500 state no sch P required. The form isn't included. Apparently doesn't exist for 2006. See instx HERE

SEPS are funded solely by Employer Contributions unless the SEP is a SARSEP which allows for employee deferrals however SARSEPS are nolonger allowed to be established. Only plans existing prior to 1997 may continue. The employer sets the contribution rate within the allowed limits ( 25% of Comp) however a specific dollar amount across the board is allowed if stated in the plan document. Self-Employeds are subject to earned income calculation. Integration is allowed in Prototypes and individually designed plans. A SEP plan may be set up on a Pre-approved document 5305-SEP or on a prototype or individually designed document. See IRS Pub 560 & 590 for additional details. As SEPs are funded through Traditional IRAs, the accounts may accept Traditional IRA contributions as well as Rollovers from other plans.

You may wish to check out this notice before considering the suggested transaction. IRS Notice 2004-8 Regarding a listed transaction with ROTH IRAs. Here

# 6 Somewhere in Time?

oops. missed that the check was made payable to IRA but participant still should have received a 1099R and included the information regarding the rollover on his 1040.

I agree with WSP. A PLR is in order but I doubt if the IRS is going to be willing to OK a Rollover based on the participant's forgetfullness. A $24,000.00 check would indicate a $30K distribution with 20% ($6,000.00) withholding. Did the participant get a 1099R. It would seem that that should have awaken him to the fact that he received a distribution. Is he so affluent that he didn't notice that he was missing $24K? Its an interesting situation but $ 24,000 isn't something I'd just put away and forget about.

I would agree with Belgarath. This can be a complex issue depending on the nature of the trust and the beneficiaries entitlement. The client should seek professional advice. My answer was a general one. BTW Ed Slott and Natalie Choate have some good information on their websites. Appleby: Care to make any comments on this?

While the account owner is alive you use the uniform table based on a 10 year difference in ages of the named beneficiary. If the trust is a qualifying trust and the account owner's spouse is the sole benefiociary of the trust and the spouse is greater than 10 years younger then the actual joint life expectancy may be used to calculate the RMD. At death, the life expectancy of oldest trust beneficiary is the determining factor for payments in the year following the year of death. If there are multiple non-spouse beneficiaries of the trust the oldest beneficiary rule still applies unless separate trusts are named as beneficiaries. Special rules apply to a sole spouse beneficiary of the qualifying trust. See 1.401(a)(9) regulations. Noel Ice has an annotated version HERE

If it's YOUR IRA then its a PT and the entire IRA is disqualified as of the first day of the transaction year and entire value is taxable.

Correct. Sorry for the mis leading lyric but i didn't use google to come up wuith them only my slightly aged memory.

So far so good. D may be a tough nut to crack.

Now that you have the rest of the original answers, what about a thru d of my mini quiz?

But you keep us informed and entertained with your Friday Puzzles I better get some work done today before I go on vacation. Thanks again Tom for all.

# 2 Not Love Boat but I cheated and found the rest of the 5 I didn't get.