Bird

I got my notice in the mail and dutifully signed up, despite my earlier post that I would wait until January. The mailing indicated that it was needed after Jan 1 so I figured if I did it now it was really for next year. It was a nuisance; the irritations that I remember were entering my home address, then "permanent" address (I used my home again), then later, just "address" - it seemed to want a business address but the name of the business wasn't required although address was; I used my home again. They wanted to know if I owned a "tax preparation" business and I originally said yes, then changed it to no; not sure because I understand that they think we are preparing tax returns but that doesn't make it a tax preparation business IMO. Then when I'm trying to pay it says "both questions with "*" must be answered" and there was only one...and it wouldn't accept the credit card info and locked me out from trying after 3 times so I had to pay by e-check. Then at the end it says it is good through 11/30/2011. So if I had waited until Dec or Jan it would have been good through Dec? I dunno, I guess I shouldn't care. Oh yeah, and when you're entering your address they have drop-downs for every territory and country in the world so you start to type "N" for New Jersey and Northern Marianas Islands is first on the list, then "U" for United States starts with U. Jibip or something and you have to spend at least an extra second looking for the US. Grrrr.

I believe - I'm pretty sure - that the 5 year election carries over to the recipient plan or IRA. So while it is true that the RMD from the OLD plan is 0 in year 5, it is 100% in the recipient plan or IRA. That is, no, you don't get to skip on 3 years of RMDs. I believe there was an incorrect conclusion earlier in this thread and noted it. Basically, if a PARTICIPANT'S spouse dies, no that does not change the RMD one whit, as long as they still have a (any) designated beneficiary. And if the participant dies, the spouse follows the "at least as rapidly" rule which does not markedly increase the RMDs.

If all payments due before Sept 30 are paid by Dec 31, then I would not default as of Dec 31. If any payments due by Dec 31 are not paid by Mar 31, then I would default as of Mar 31. The original 5 year last payment date is not relevant to the discussion, IMO.

I'm confused. How could the RBD for a 5% owner, who is older than a now 85 year-old spouse, be 2008? I don't know that it matters but maybe there are incorrect facts that could affect the conclusions. And if the participant does have a designated beneficiary, then the RMD is is based on the longer of the bene's life expectancy or the participant's life expectancy determined in the year of death and reduced by one each year thereafter.

IMO insurance premiums should always be treated as transfers from the side fund, not direct contributions. Viewed that way, the employer contributed $1,000 to the side fund then transferred it to the policy. If the side fund is pooled, that's the end of the discussion. If self-directed, then it's uglier; you have to actually take $1,000 from this particular participant's account and reallocate it to others.

So, has anyone ever received a Department of Labor Notice of Intent to Assess a Penalty? And what happened, were you able to get the penalty abated? Curious minds...

I agree; the missed payments are not PTs.

Generally, monies can't be put in a plan in year X and not allocated until year X+1. And again, if you put money into a safe harbor account and "something happens" to make it be removed, it is NOT a forfeiture. It's a red herring, as far as this discussion goes.

Putting too much money into someone's account and then taking it out is not a forfeiture. It might wind up in spreadsheet column labeled "forfeiture" but it's not. As for the rest of this discussion, as has been noted already, most documents explicitly permit the use of forfeitures to reduce most or all types of contributions. If they don't like it, they can change it the next time master documents are submitted for approvals. I think the "new" group of IRS panelists needs a little more experience and they are, effectively, thinking out loud and maybe even stating what they personally think "should" be rather than what the law and regs allow.

I don't see a problem with making payments from severance pay. The plan and/or loan policy may or may not require trigger the need for full repayment on termination (and default if not repaid), and termination may or may not be a distributable event. Your answers should really be in the document/policy somewhere.

Also not to mention that that's not at all what the instructions say to do. Ignore it. I haven't had direct experience but I think I remember hearing that they can't quite handle changes in EIN without thinking that the old EIN didn't file a return. It should go away with one round of correspondence. I guess you just leave the acknowledgment number blank.

I say no, it's not a distribution. I think the law uses the term "distribution" but even if you take that literally, it's not eligible for rollover back in. An all-Roth account would have to physically remove money from the plan just like any other account.

Is it such a hardship for the employer to vest at 100%? I know that forfeitures might reduce contributions, but that's not typically a big number, in my experience.

The proposed regs said that it is anticipated that anyone who got a PTIN before the final regs were out would have a transition period. The final regs are expected late Oct/early Nov. I thought I remembered a specific timeline for the transition but can't find it and might be mis-remembering

masteff and mbozek, I understand and agree, thanks.

I don't think a joint and 100% annuity for a non-spouse beneficiary meets the RMD rules. And I doubt anyone would want to do that, locking in low interest rates not only for the first life but the second.

They are supposed to be accepting filings in Lawrence Kansas through today; I guess that includes postmarks for today. But the reality is that they are forwarding everything to DC for processing at this point. Some folks have had mailings returned. It's ultra-important to get proof of filing. asap 10-25. Sorry, a little late unless you're out west.

They may not be keen on it but it is definitely permitted. I don't have a cite, sorry.

Yes, file 2009 on time and go dfvc on 2008.

I think there was a time when short years couldn't be extended. Can't find it in the instructions, even in some older forms booklets that I have laying around, so, if it was a rule, it's been quite a while.

Yes, this was raised earlier; I'm not a big one for finding old threads but I think the options are: 1. figure out the new process and help clients get set up and help them use it (ugh) 2. use Penchecks or some other service where you send them a gross check and they do withholding and 1099s 3. just pay up to $2,500 when filing the 945 (seems hard to believe because the old rules said if WH was over $500 it had to be done monthly, but that's how I read it)

Tom, Tom, Tom, repeat after me - "Ft William" (no "s"). Our experience with them has been the same - excellent. Immediate confirmation of filing (or error).

You mean, how does he prevent the 49 year old from taking it all at once? He can't do it directly; I think he might be able to designate a trust as beneficiary and then have the 49 year old be the beneficiary of the trust; the trust would restrict payouts as desired. There are requirements to be met to assure that the IRA can look through the trust to determine that the beneficiary is a "named beneficiary" of the IRA and it can use the beneficiary's life expectancy in its RMD calcs.

I dunno, you read that cite and it says "the current availability test could be treated as satisfied if there are at least similar investment options available to NHCs that do not have such a condition." You're saying the investment options are A. John Hancock, or B. money manager with $500K minimum. Seems like there's no "similar" option to B.

uh-oh. Could mess up some guvmint statistics that say average plan size is x.1233456789 when it really is x.12345678. I always say to be careful with these kinds of questions, because when you start to "go there" you realize how very UNimportant a lot of the "work" we do is!