jevd

I believe this is what the transaction is to be based on. See bolded text. From the Preamble to the Final Regulations under 401(a)(9): Election of Surviving Spouse to Treat an Inherited IRA as Spouse's Own IRA These final regulations generally retain the clarifications in the 2001 proposed regulations regarding how and when a surviving spouse of a deceased IRA owner can elect to treat an IRA inherited by the surviving spouse from that owner as the spouse's own IRA. The 1987 proposed regulations provided that this election is deemed to have been made if the surviving spouse contributes to the IRA or does not take the required minimum distribution for a year under section 401(a)(9)(B) as a beneficiary of the IRA. Under the 2001 proposed regulations, this deemed election is permitted to be made only after the distribution of the required minimum amount for the account, if any, for the year of the individual's death. These final regulations provide that the election can be made at any time after the IRA owner's date of death, while clarifying that the minimum required distribution for the calendar year of the IRA's owner's death is determined assuming the IRA owner lived throughout the year. These regulations also clarify that the surviving spouse is required to receive a minimum distribution for the year of the IRA owner's death only to the extent that the amount required was not distributed to the owner before death. Some commentators raised concerns about the other clarifications in the 2001 proposed regulations. The 2001 proposed regulations clarified that a deemed election is permitted only if the spouse is the sole beneficiary of the account and has an unlimited right to withdraw from the account. This requirement is not satisfied if a trust is named as beneficiary of the IRA, even if the spouse is the sole beneficiary of the trust. As explained in the 2001 preamble, these clarifications make the election consistent with the underlying premise that the surviving spouse could have received a distribution of the entire decedent IRA owner's account and rolled it over to an IRA established in the surviving spouse's own name as IRA owner. If the spouse actually receives a distribution from the IRA, the spouse is permitted to roll that distribution over within 60 days into an IRA in the spouse's own name to the extent that the distribution is not a required distribution, regardless of whether or not the spouse is the sole beneficiary of the IRA owner. Further, if the distribution is received by the spouse before the year that the IRA owner would have been 70½, no portion of the distribution is a required minimum distribution for purposes of determining whether it is eligible to be rolled over by the surviving spouse I believe the assupmtion in the bolded statement is that if the spouse qualifies as a pass thru beneficiary of the IRA, through the marital trust then he/she could rollover the funds into a IRA in his/her own name. JEVD.

Just re-read OP. I did misread.

Although some IRA trustees will acknowledge a QDRO, many will not. They will simply send a form that requires both parties to agree to the division of the IRA and require that the receiving spouse give instructions where the IRA account in their name is held and how it is to be transferred. Many also require the receiving trustee/custodian to send an acceptance letter acknowledging that the funds will be deposited in an IRA account in the name of the receiving spouse. It would be advisable to check with the account owner's IRA trustee/custodian to see what they require before spending a lot of time and effort on the QDRO.

IRA's are not governed by QDRO's although some IRA trustees may accept them. They are governed under IRC 408(d)(6) and the benefit to the ex-spouse (Alt Payee) is a trustee transfer to an IRA in the name of the receiving spouse: 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.

Employee Plans News March 06 See above link to the special Edition of EP News. Edit to state the link in the newsletter doesn't work. There is information in the letter regarding the program. I'll keep looking. Further update. Apparently the IRS has removed the letters from their web-site. You may want to contact them if you need a copy. Maybe someone else has a copy.

HERE See above site. There are two PDFs that should be helpful for Post Erisa Legislation.

(20/80) X (6/80) to the 6th power should give you your chances of hitting 6 out of 6. not as simple as I thought. Tom beat me to it above.

Its part of the account value, so, Yes.

Account holder is 70 1/2. I like your idea though. It still would require the RMD for the current year to be satisfied and it would mean paying the taxes on the entire account. It would however preserve tax deferred and possibly tax free income.

Will the transfer agent/sponsor allow for a partial in-kind distribution to the client of the amount required tosatisfy the RMD? (Joint ownership between the IRA and the client as an individual)

I believe we have an over use of a particular word in this post. I know I know it has become common place and back when I was a teenager (A long long time ago) it meant somthing quite different than today & I don't mean the dictionary version. I ban its use in my household and have requested its non-use in business meetings etc. Thanks for listening. Sermon over.

The first distributions in a year in which a plan participant is 70 1/2 or older are considered RMDs. They are not rollable. RMDs must be taken and the remainder may be rolled out. Before rolling all funds consider advantages of retaining any company stock (if there is any in the plan) outside of the IRA. See Here in todays articles from benefits link: Here

IRS Pub 590 has the tables and Here is a site for the annotated regulations which contain the tables Thanks to Noel Ice. Here:Annotated Regulations thanks to Noel Ice PUB 590 Appendix C 590 Here: PUB 590 Tables start on page 88

20% mandatory does not apply to IRAs. Withholding is voluntary but a minimum of 10% if requested.

In my opinion re-state the document to name corporation as employer. A new traditional IRA account to accept the SEP contributions is NOT necessary unless the individual wants to maintain for record keeping purposes but I see no advantage to that. Someone with more tax related knowledge may have a different opinion.

As an addendum, Q & A 1 above includes the Temp Regs for the distribution of Annuities as Part of the IRA RMD rules unless otherwise stated in the IRA Regs. Being the case that the annuity contract has been annuitized, it in effect has been separately calculated and separately satifies the regulations. The added IRA account with Mutual Funds etc. in essence is being satisfied separately by the additional $8,000 and an overage from the annuity dist.. I'm assuming that since both accounts are initially valued the same that the $12,000 from the annuity is more than the calculated RMD for the annuity. In future years, the valuation of the annuity may be an issue. The regulations do not address this issue clearly. ( at least not to my non-actuarial self). Therefore I agree with the answer you received on the 72(t).net site. (I visit there on a regular basis.) Regards

Here is a copy of the First Q & A 1.408-8 see Bolded section. Since the Annuity is treated just the same as any other IRA for purposes of this section, then aggregation is permissable. And also see 1.408-8 Q & A 9 10.1 Q-1. Is an IRA subject to the distribution rules provided in section 401(a)(9) for qualified plans? A-1. (a) Yes, an IRA is subject to the required minimum distribution rules provided in section 401(a)(9). In order to satisfy section 401(a)(9) for purposes of determining required minimum distributions for calendar years beginning on or after January 1, 2003, the rules of §§1.401(a)(9)-1 through 1.401(a)(9)-9 and 1.401(a)(9)-6T for defined contribution plans must be applied, except as otherwise provided in this section. For example, whether the 5-year rule or the life expectancy rule applies to distributions after death occurring before the IRA owner's required beginning date is determined in accordance with §1.401(a)(9)-3 and the rules of §1.401(a)(9)-4 apply for purposes of determining an IRA owner's designated beneficiary. Similarly, the amount of the minimum distribution required for each calendar year from an individual account is determined in accordance with §1.401(a)(9)-5. For purposes of this section, the term IRA means an individual retirement account or annuity described in section 408(a) or (b). The IRA owner is the individual for whom an IRA is originally established by contributions for the benefit of that individual and that individual's beneficiaries.(b) For purposes of applying the required minimum distribution rules in §§1.401(a)(9)-1 through 1.401(a)(9)-9 and 1.401(a)(9)-6T for qualified plans, the IRA trustee, custodian, or issuer is treated as the plan administrator, and the IRA owner is substituted for the employee.[192] © See A-14 and A-15 of §1.408A-6 for rules under section 401(a)(9) that apply to a Roth IRA. 10.9 Q-9. Is the required minimum distribution from one IRA of an owner permitted to be distributed from another IRA in order to satisfy section 401(a)(9)? A-9. Yes, the required minimum distribution must be calculated separately for each IRA. The separately calculated amounts may then be totaled and the total distribution taken from any one or more of the individual's IRAs under the rules set forth in this A-9.[207] Generally, only amounts in IRAs that an individual holds as the IRA owner may be aggregated. However, amounts in IRAs that an individual holds as a beneficiary of the same decedent and which are being distributed under the life expectancy rule in section 401(a)(9)(B)(iii) or (iv) may be aggregated, but such amounts may not be aggregated with amounts held in IRAs that the individual holds as the IRA owner or as the beneficiary of another decedent.[208] Distributions from section 403(b) contracts or accounts will not satisfy the distribution requirements from IRAs, nor will distributions from IRAs satisfy the distribution requirements from section 403(b) contracts or accounts.[209] Distributions from Roth IRAs (defined in section 408A) will not satisfy the distribution requirements applicable to IRAs or section 403(b) accounts or contracts and distributions from IRAs or section 403(b) contracts or accounts will not satisfy the distribution requirements from Roth IRAs.[210]

I suggest he seeks ERISA Counsel and look into EPCRS to correct.

A qualified trust must have identifiable beneficiaries, that is they must be individuals either named or identifiable as a class. If a charity or some other organization is the beneficiary of the beneficiary trust then the trust will not be considered qualified and the rules to determine life expectancy are the same as if no beneficiary is named. During the lifetime of the account owner, the uniform tableis used. At death, it will depend on pre or post RBD death. Pre RBD death would require the 5 year rule, post RBD death, the single life table would be used using the age of the deceased account owner in the year of death on a non-recalculated basis. If the trust is qualified, see RMD REGS, then the Life expectancy table used during the account owners lifetime is the uniform table unless the undelying trust beneficiary is soley the spouse of the account owner who is more than ten years younger. Then the Joint Table would be used. At death, the oldest beneficiary of the trust is the designated beneficiary for calculation purposes and rules for pre & post RBD death apply as if that individual was the named beneficiary. Payments however should be made to the trust. SEE RMD REGS 1.401(a)(9)-4 Q & A 1 & 4.

IRS Notice 98-4 Q & A C-2 Reproduced below seems to answer your question. Q. C-2: May an employer impose less restrictive eligibility requirements? A. C-2: An employer may impose less restrictive eligibility requirements by eliminating or reducing the prior year compensation requirements, the current year compensation requirements, or both, under its SIMPLE IRA Plan. For example, the employer could allow participation for employees who received $3,000 in compensation during any preceding calendar year. However, the employer cannot impose any other conditions on participating in a SIMPLE IRA Plan.

1. The IRA holder may receive the excess contribution in cash or in kind as long the net value received reflects the gain/loss while the amount was in the IRA. If a gain, it is taxable whether it is received in cash or in kind. If the individual is under 59 1/2, it may be penalized unless an exception is available (Death, Disability). 2. There is generally an immediate tax obligation, however the income (if any) is taxable in the year for which the contribution was made not the year received if the correction occurs within tax filing deadlines. A correction after tax filing deadlines would not include the income/loss. See IRC 408(d)(4) & (5). 3. Yes but only on the income. The principal amount is not taxed as long as it is removed by tax filing deadline and no deduction was taken on the return for the year of contribution. As this is a Roth, The Principle would generally not be taxed in any circumstance. Amended returns may need to be filed depending on when the correction takes place. That being said, I'm not an acountant and the individual should seek the advice of a competent professional.

Generally speaking, all income from IRAs is ordinary income. I can't address your cost basis issues. Maybe one of the accountants on the boards has an opinion.

All of it.

Thanks for the reply, on page 64 it says "any contribution that is withdrawn before the due date for fililng your tax return for the year is treated as an amount not contributed." Does this mean that if I withdraw the 5k it's like I never contributed it in the first place? Thanks! Yes. But be sure the withdrawal includes the net of earnings/loss.

Regardless of your interpertation of the above; the transaction, if done, must be done as a trustee to trustee transfer, otherwise it will be taxable to the husband and may be an excess contribution to the wife in an amount above the normal contribution limit.