pompton

An employer sponsors a SEP IRA. An automatic draft had been set up to have funds moved from the employer business account into the SEP IRA. The employer advised the bank to stop the draft, but the bank did not do so timely. As soon as the employer noticed the transfer, the funds were requested to be returned to the employer from the SEP IRA. This was within one week's time. The SEP investment provider is issuing a Form 1099 with a premature distribution code. While I know the employer can look to the bank for redress, I am wondering if anyone has ideas on how to or experience with the Service to request a waiver of the distribution and/or penalty for this "mistaken" contribution which was returned. Is there a correction program which addresses this type of problem? This happened more than 60 days ago. Any help is appreciated.

Thanks!

An employee (not a 5% owners) participates in a 401k plan sponsored by his employer. The plan allows IRA accounts to be transferred into the plan. The plan does not require employed participants to begin taking distributions at 70 1/2. RMDs can be postponed until actual termination of employment. If the employee is post 70 1/2 and has taken his RMD from his IRA for the calendar year, can he rollover the balance into his employer's plan to defer taking RMDs from the IRA monies?

An employer makes a contribution for participants that were incorrectly excluded from a profit sharing plan for several years under self-correction. The total contribution for the current year and the make up for prior years in which the employees were improperly excluded exceeds the 25% deduction limit for the current year. The deduction for the current year is within the 25% limit. Can the employer deduct the amounts above the 25% limit as a Section 162 business expense. If so, does that reduce a Schedule C?

Client establishes new DB plan eff 1/1/06. Later on advises that made a SEP contribution in 2006 for 2006. Is the SEP treated as a profit sharing plan for purposes of the deduction rules? Can the deduction for the SEP be had if the SEP contribution is equal to or less than 6% of eligible comp under PPA for 2006?

Could a participant make a loan repayment in the form of stock? My thoughts are that the transfer of stock by a participant to a plan would be a transfer of title, with all attendant income tax consequences, but more importantly could also be a prohibited transaction. Any information or thought?