jevd

Just a bit of History. Keogh Plans. Named after Eugene Keogh. Major sponsor of 1962 bill HR-10. Also known as HR-10 plans. Designed as Qualified Plans for the self-employed. Since the 1980s no major differences to Q P s for Corporations. One of the most mispelled plans in my 25 make that 30 year career. Keough Kehoe Keog Key-Hole Key Ho Anyone else have any more?

it depends, Some proposed regulations are issued with instructions that they may be relied upon until temporary or final regs are issued. There is generally a comment period where the service collect additional reactions to the proposed regs. They will then issue temporary or finals. in some cases, proposed regulations are issued only for comment and may not be relied upon. This information is generally in the preamble to the regulatiion.

I don't believe a deemed distribution is rollable. Can you support your statement?

The only difference would be the ability to rollover the entire benefit and avoid tax on the loan.

Sal Tripodi leading us all in "HAPPY BIRTHDAY DEAR ERISA'

See 2004 instructions for 1099R Box 8 Other.. It would appear that the actuarial value of the annuity is not included in the Gross or taxable amount of the distribution.

A look through trust under the RMD regs is a qualified trust (see regs 1.401(a)9) which allows the distribution to be made to the trust according to the life expectancy of the oldest trust beneficiary. The trust then passes the distribution as stated above. (edited for typos) FROM RMD REGS 4.6 Q-6. If a trust is named as a beneficiary of an employee, what documentation must be provided to the plan administrator? A-6.[112] (a) Required minimum distributions before death. If an employee designates a trust as the beneficiary of his or her entire benefit and the employee's spouse is the sole beneficiary of the trust,[113] in order to satisfy the documentation requirements of this A-6 so that the spouse can be treated as the sole designated beneficiary of the employee's benefits (if the other requirements of paragraph (b) of A-5 of this section are satisfied), the employee must either— (1) Provide to the plan administrator a copy of the trust instrument and agree that if the trust instrument is amended at any time in the future, the employee will, within a reasonable time, provide to the plan administrator a copy of each such amendment; or (2) Provide to the plan administrator a list of all of the beneficiaries of the trust (including contingent and remaindermen beneficiaries with a description of the conditions on their entitlement sufficient to establish that the spouse is the sole beneficiary) for purposes of section 401(a)(9); certify that, to the best of the employee's knowledge, this list is correct and complete and that the requirements of paragraph (b)(1), (2), and (3) of A-5 of this section are satisfied; agree that, if the trust instrument is amended at any time in the future, the employee will, within a reasonable time, provide to the plan administrator corrected certifications to the extent that the amendment changes any information previously certified; and agree to provide a copy of the trust instrument to the plan administrator upon demand. (b) Required minimum distributions after death. In order to satisfy the documentation requirement of this A-6 for required minimum distributions after the death of the employee (or spouse in a case to which A-5 of §1.401(a)(9)-3 applies), by October 31[114] of the calendar year immediately following the calendar year in which the employee died, the trustee of the trust must either— (1) Provide the plan administrator with a final list of all beneficiaries of the trust (including contingent and remaindermen beneficiaries with a description of the conditions on their entitlement) as of September 30 of the calendar year following the calendar year of the employee's death; certify that, to the best of the trustee's knowledge, this list is correct and complete and that the requirements of paragraph (b)(1), (2), and (3) of A-5 of this section are satisfied; and agree to provide a copy of the trust instrument to the plan administrator upon demand; or (2) Provide the plan administrator with a copy of the actual trust document for the trust that is named as a beneficiary of the employee under the plan as of the employee's date of death.[115] © Relief for discrepancy between trust instrument and employee certifications or earlier trust instruments. (1) If required minimum distributions are determined based on the information provided to the plan administrator in certifications or trust instruments described in paragraph (a) or (b) of this A-6, a plan will not fail to satisfy section 401(a)(9) merely because the actual terms of the trust instrument are inconsistent with the information in those certifications or trust instruments previously provided to the plan administrator, but only if the plan administrator reasonably relied on the information provided and the required minimum distributions for calendar years after the calendar year in which the discrepancy is discovered are determined based on the actual terms of the trust instrument.[116] (2) For purposes of determining the amount of the excise tax under section 4974, the required minimum distribution is determined for any year based on the actual terms of the trust in effect during the year.[117] Complete regs notated by Noel Ice at http://www.trustsandestates.net/MRDRegs/MR...htm#_Toc9937225

If the beneficiaries did not open an inherited IRA you would have a situation with an IRA FBO 2 beneficiaries. However, upon further consideration,I agree that opening a single inherited IRA for two individuals would be a problem. Its just not addressed in the regulations.

There is nothing in the regulations that says individual accounts must be opened in this case. It may become an accounting problem keeping track of distributions to be sure they are distributed equally unless all checks are made payable jointly.

This information was posted 8/30/04 on the 403(b)wise website. The NTSAA has advised its members today that the 403(b) regs are postponed indefinitely. It is not clear whether we should expect a modest delay or a longer one, but the implication seems to be that we shouldn't expect anything in the next month or two, at least.

I think your question is best answered with a private letter ruling. There have been some in the past prior to REV RUL 2002-62 which allowed for the prorated 72(t) distribution to take place as long as the recceiving spouse took the distribution. I would agree that you probably shouldn't add the funds to the existing plan as that would violate 2002-62 rules on additions etc. Best bet is to get PLR.

Hi, I've been on vacation for 2 + weeks. Any word on 403(b) regs???

Any update on the release of these regulations??

If you have losses, you may want to consider filing to be able to deduct those losses in future years. This would apply if you expect to be subject to UBIT in future years.

My understanding is that the 50% penalty applies only to the "underdistributed RMD amount" RMD is only one method for calculating the 72(t) distribution. The penalty for busting a 72(t) substatntially equal payment is that the amounts from day one are taxed and penalized (with interest) as if they were premature distribution with no exception applying. 2002-62 allows for a one time change to RMD calculation method and there is very little wiggle room if any.

Check state simultaneous death rules as to presumtion of who died first. This is generally not stated in the plan document.

Here is Noel Ice's annotated version of final regs with the proposed DB/annuity regs included http://www.trustsandestates.net/MRDRegs/MR...htm#_Toc9937165

MBC is now in receivers hands!

Thank you all. We will refer the client to counsel and have checked with ours. Still waiting their reply. I will advise their opinion when it comes.

Mbozek, What about the requirement that the non-spouse inherited IRA be distributed over the beneficiary's life expectancy? Does that requirement follow to the transferred account?

Thanks Appleby. I'm waiting to speak to in house counsel now.

I have a situation where a client is asking if all or a portion of his inherited IRA (he is a non-spouse beneficiary) may be transferred to his spouse/ex-spouse under 408(d)(6). Both the code and reg 1.408-4 describe an individuals interest. Would you include as an individuals interest in an IRA one held as an "Inherited IRA" which has specific distribution requirements attached to it. If it is allowed to be transferred under 408(d)(6) and the spouse treats it as their own, then you have a de-facto rollover to a non-spouse non beneficiary of the original IRA. Reprint below of appropriate code & regulations. 408(d)(6) TRANSFER OF ACCOUNT INCIDENT TO DIVORCE. --The transfer of an individual's interest in an individual retirement account or an individual retirement annuity to his spouse or former spouse under a divorce or separation instrument described in subparagraph (A) of section 71(b)(2) is not to be considered a taxable transfer made by such individual notwithstanding any other provision of this subtitle, and such interest at the time of the transfer is to be treated as an individual retirement account of such spouse, and not of such individual. Thereafter such account or annuity for purposes of this subtitle is to be treated as maintained for the benefit of such spouse. 71(b)(2) DIVORCE OR SEPARATION INSTRUMENT. --The term "divorce or separation instrument" means -- 71(b)(2)(A) a decree of divorce or separate maintenance or a written instrument incident to such a decree, 71(b)(2)(B) a written separation agreement, or 71(b)(2)© a decree (not described in subparagraph (A)) requiring a spouse to make payments for the support or maintenance of the other spouse. 1.408-4 (g) Transfer incident to divorce (1) General rule. --The transfer of an individual's interest, in whole or in part, in an individual retirement account, individual retirement annuity, or a retirement bond, to his former spouse under a valid divorce decree or a written instrument incident to such divorce shall not be considered to be a distribution from such an account or annuity to such individual or his former spouse; nor shall it be considered a taxable transfer by such individual to his former spouse notwithstanding any other provision of Subtitle A of the Code. (2) Spousal account. --The interest described in this paragraph (g) which is transferred to the former spouse shall be treated as an individual retirement account of such spouse if the interest is an individual retirement account; an individual retirement annuity of such spouse if such interest is an individual retirement annuity; and a retirement bond of such spouse if such interest is a retirement bond. [Reg. §1.408-4.]

When it comes to determining the taxable amount of the conversion, it doesn't matter which account is used as the IRS considers all traditional IRAs as one. See form 8606 and its instructions.

I agree with both Appleby and Belgarath. What about getting astatement from the IRA account owner that he/she has an IRA elsewhere and is taking the RMD from that IRA and holds the IRA custodian/trustee harmless etc. since it is ultimately the account owners responsibility to take the distribution. Without it I would distribute the RMD to the account owner. They could always refuse withholding on the distribution to them and make an indirect rollover to the 403(b) if they desired.

Thanks Kirk