masteff

If you treat both the current loan and the new loan as outstanding, do they "collectively satisfy" the maximum allowable loan limits? If so, then I think you're golden. If it would violate the limits, then I'd think you'd want explicit permission under the VCP. 1.72(p)-1 Q&A-20(a)(2) is actually entitled "Loans that repay a prior loan and have a later repayment date". Without going back to the preamble for the intent when the reg was rewritten a decade ago, the effect was in part to relieve the old problem of a participant in a plan that only permitted a single loan having to get temporary outside funds (eg a bridge loan from a 3rd party).

Agreed. "calendar year" and "distribution calendar year" 1.401(a)(9)-5 Q&A-1(b) and 1.402©-2 Q&A-7

Top of 2nd column, page 18 here: http://www.irs.gov/pub/irs-pdf/i1099r.pdf 　 Total distribution, no contributions. Generally, if a total distribution was made from an account during the year and no contributions, including rollovers, recharacterizations, or Roth IRA conversion amounts, were made for that year, you need not file Form 5498 nor furnish the annual statement to reflect that the FMV on December 31 was zero.

If you go back to IRS Pub 575 from 1994, on page 12 it discusses that 1986 is when the rules changed over on whether earnings had to be allocated to a distribution of after-tax money. So if you have pre-87 money, then you can take basis out first and have no taxable income. But if you have post-86 money, then you must take earnings ratably with basis, resulting in it being partially taxable. See pages 16-17 of current Pub 575. 1994: http://www.irs.gov/pub/irs-prior/p575--1994.pdf Current: http://www.irs.gov/pub/irs-pdf/p575.pdf

Q1 - Because that's not what the insurance company sells. You might ask the ins company: "so if it's moved to another individual retirement annuity, would that simply be a check or is there a contract and the contract would have to be moved". You're hoping they say it's a check in which case I don't know why it couldn't be moved to a traditional IRA. Q2 - I'm not sure that's an entirely valid option because of the MRD rules. But if we change the question to "an annuity that meets the MRD rules", then I'd suspect you're correct. Given how you describe the paperwork, I wouldn't have high hopes. Q3 - As a general rule of thumb, don't take investment advice from an insurance salesperson. Otherwise, just remember if the first distribution isn't taken in a timely manner then can inadvertantly be locked into taking it out over a 5 year period. And I'm far from expert on the MRD rules w/ respect to annuities, so if anyone knows better on Q1 & Q2, please speak up.

Prior discussion: http://benefitslink.com/boards/index.php?/topic/51547-hardship-distribution http://benefitslink.com/boards/index.php?/topic/43340-proof-of-hardship-needed/ You'll note in the discussion that no one cite's a "3 month" rule because there isn't one. The two safe harbor hardship reasons that have a stated or implied time frame are "to prevent eviction or foreclosure" (can't prevent something that isn't reasonably imminent) and "next 12 months of post-secondary education". (Interesting, the reg actually says "next 12 months" but the link 401king gave doesn't.)

We've had prior discussion on the topic although it's a bit hard to find since the forum search feature doesn't like 3-letter words like "SSA" http://benefitslink.com/boards/index.php?/topic/51349-inaccurate-notice-of-benefit-from-ssa/

No "Monte Carlo" simulation to show the range and probability of outcomes? Is that no longer the big rage in planning software? (Don't get me started on using the name of a place associated with casinos and gambling to make retirement projections.)

To add to what GMK and Bird are discussing, here's Reg 1.401(a)(9)-7 Q&A-1 Q-1. If an amount is distributed by one plan (distributing plan) and is rolled over to another plan, is the required minimum distribution under the distributing plan affected by the rollover? A-1. No, if an amount is distributed by one plan and is rolled over to another plan, the amount distributed is still treated as a distribution by the distributing plan for purposes of section 401(a)(9), notwithstanding the rollover. See A-1 of § 1.402©-2 for the definition of a rollover and A-7 of § 1.402©-2 for rules for determining the portion of any distribution that is not eligible for rollover because it is a required minimum distribution. So the EE takes the full rollover now but then retires, so the plan sends appropriate 1099-Rs and a letter saying part of dist wasn't rollover eligible and must be removed from the receiving account.

Statute of limitations (I don't know what that time limit is on a 1099-R, but that's a key factor)

See IRS Pub 560, page 6, last paragraph in the middle column. http://www.irs.gov/pub/irs-pdf/p560.pdf And if he's has a 5305-SEP model plan, then he can't maintain a qualifed plan. Would need to switch to a non-model SEP plan. See form 5305-SEP.

Agreed, (iv) is why he'd need to continue doing distributions. (v) is a reason why he might not have to (depending on age at separation from employment).

You need to figure out where the other money in the Roth came from and when. See the 3rd question here: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-IRAs-Recharacterization-of-Roth-Rollovers-and-Conversions Also see IRS Pub 590 and Form 8606. Oh, and are you sure the client didn't just do very well in the market and the $30K is the actually the $6K plus related earnings?

Did you mean (v) rather than (iv)? "(v) made to an employee after separation from service after attainment of age 55"

BG - I see what you're thinking about the back office transfer to a bene account. I take the OP as the next step in the process. That the bene did a distribution and rollover so as to consolidate the two accounts into a single account. I saw this happen a few times. I'd say Tom Poje has the winning answer yet again.

HCE 1 is a disqualified person. They are proposing a transaction between the plan (via the SD account of HCE 2) and a disqualified person (by virtue of that person being the owner of company B, the LLC). Smells like a PT to me.

What additional principal can be borrowed? The current balance is equal to the max allowed by the statutory loan limit. $50,000 - $26,0000 (highest bal in prior 12 months) = $24,000 http://www.irs.gov/Retirement-Plans/Loan-Limits-Apply-to-All-Plans

And you'll note if you read 72(t) carefully, that it's neither the date of request nor of receipt, but rather the date of distribution that matters.

For what it's worth, here's a prior thread on the topic: http://benefitslink.com/boards/index.php?/topic/46941-5-years-even-amortization/ I personally would find a 3 month delay before starting monthly payments to be slightly abuse of commercially reasonable terms.

Arguably, that's a key part of the simplification that was introduced by the 2002 401(a)(9) regulations... default to the Uniform Life Table. I'd frankly put the burden on the participant if the plan sponsor hasn't otherwise collected the spouse's DOB. I certainly don't see the plan having a burden since the Uniform Life Table will result in the larger of possible distributions and thus will satisify the required distribution under all scenarios of the spouse's age.

Is the participant still alive? Actually, the rule if the spouse is the sole beneficiary is to use the better of the Uniform Life Table or the joint life table (Reg 1.401(a)(9)-5 Q&A-4(b)(1)). The Uniform Life Table is equal to the joint table using a bene who is 10 years younger. If you lack the proper information to make the determination of the spouse's age, then (in my opinion) use to the Uniform Life Table as if you hadn't/couldn't determined the designated beneficary. Also see IRS Pub 590

LuckyDucky - So after your dad's death, I presume you or someone contacted the plan and they likely sent out paperwork to you and any other beneficiaries. Do you still have that paperwork? Does it contain something that has a title like "Special Tax Notice"? Their citing a 180 day time limit makes me think they sent you the "Special Tax Notice", which they were required to do as per IRS Notice 09-68. While ETK is generally correct, I suspect you already received your opportunity to make an election and failed to realize that a distribution wasn't optional. If you still have that paperwork and it really is confusing and doesn't explain at all that you had to make a choice or else the money would be sent automatically, then you could try filing a claim with the plan. (You'd need to ask the plan for a copy of their ERISA claims procedure.) The reason they never contacted you again after that initial paperwork is that IRS Reg 1.417(e)-1(b)(1) says in part: "After the participant's death, a benefit may be paid to a nonspouse beneficiary without the beneficiary's consent." Meaning, they didn't need your permission to distribute the money. Note that a nonspouse beneficiary can only do a rollover from a qualified plan by a "direct rollover". Meaning that you cannot do anything to fix it yourself (by rolling it over now). You don't mention whether your dad was or would now be over age 70 1/2; if so then some portion of the money would be a minimum required distribution and would not be eligible for rollover.

Have they asked the magic question of what does the participant want? The participant is essentially whole, it's really just a classification error of the funds. Looking at "Future Enhancements" in Rev Proc 2013-12 section 2.05(3), I think it would not be too unreasonable to reclassify the 2% and issue a corrected W-2. But I don't think doing a 2% QNEC is a wrong solution; just more than is what is actually needed. http://www.irs.gov/pub/irs-drop/rp-13-12.pdf

1) your title says "sar sep". you can do a "sep" but not a "sar sep". the "sar" part of it was no longer permitted in new plans after 1996. 2) the instructions on form 5305-SEP say: "When not to use Form 5305-SEP. Do not use this form if you: 1. Currently maintain any other qualified retirement plan. This does not prevent you from maintaining another SEP."

Don't jump straight to VCP... self correction may be a valid option: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-the-Self-Correction-Program-(SCP)#6 We have several factors that need to be investigated before excluding self-correction as a possibility. For anyone who's still in the plan, you have at most a clerical error on their statement in showing their vested balance. In my opinion, for a faulty vesting calc, you don't have an actual error until you take an action based on the faulty calc. So you can narrow your immediate concern to any distributions since 1/1/09 that were not 100% vested.