masteff

Despite filing jointly, your and your wife's IRAs are separate so could have differing elections as you describe. The enabling law (TIPRA 2005) didn't address recharacterization when it provided the 2-year extended taxation period... therefore I'd say that rule stands the same as right now.

The income limit is removed prospectively (for all future years until otherwise changed). The law only uses the word "election" w/ regard to spreading the tax to 2011/12. Usually "election" means either/or. The catch is that while you look at them as IRA A and IRA B, in some circumstances the IRS just sees them as one IRA combined. Just have to wait and see how the IRS approaches this one.

The plan has a new EIN (see first post). I'm not saying it's certain they'd come looking for a non-filer but the plan is now in their system.

Other concern... so the new plan doesn't have any benefits accruing in it? Or did 2008 benefits go into the old plan when they should have gone into the new plan per the new plan's document? What does the old plan's document say about when benefits cease accruing under it? And my opinion is the Service will be looking for a 5500 on the new EIN so if you amend then you need to be sure to somehow update w/ the Service so they don't ding you as non-filing.

Only matters if those foreign subs have US payroll.

At least one such requirement is the QJSA notice, try reg section 1.417(e)-1(b)

What section/subsection of the document is the hardship language in? Is called "distributions" or "in-service distributions"? Does the hardship section of the document use the word participant or employee (and is employee defined in the plan)? I presume your plan is all or nothing on terminated distributions (ie lump sum only, no partial or as needed); the plan doesn't state in some other section that a term'd participant only gets a specific list of distribution options? I've never had a plan that allowed term'd hardships but I don't see why it couldn't be possible. This I know the answer to... the regs say the plan or other plan of the employer. So if the plans are unrelated then you have no issue.

As for this original poster's situation, you don't track them at the end... you spend a small amount of time at switch-over to make sure the amort schedules are updated properly so the fin inst applies the right amount of interest. You just have to figure out ahead of time how you calculate/adjust the interest so principal comes out to zero after the last scheduled payment is made. Now if you're using a system that calculates the accrued interest itself when a payment is applied, then you have a messier situation. Another thought... it'd be hard to reamortize the payment given that the participant signed a loan doc (unless you have some useful language in the loan doc). If you can't reamortize, then you'd only have option of doubling the weekly payment and applying interest as if the payments had been made weekly as per the loan doc.

This thread from 2008 has some additional links of use in it: http://benefitslink.com/boards/index.php?showtopic=38399 But the general concensus is that it can be done as a plan investment but it's very tricky and needs an attorney. EDIT: I just looked at Bill Presson's link and it's newer than the info I linked above, so do give Bill's linked IRS memo a lot of weight over the older board discussions.

I agree not allowable. See IRS publication 969, page 8. http://www.irs.gov/pub/irs-pdf/p969.pdf

While it only applies to a limited number of eligible expenses, a limited-purpose FSA is still an FSA so all the FSA rules would seem to apply unless someone knows of special restrictions/provisions that aren't readily apparent to me.

Just to put some numbers to the question.... Assume you have the maximum loan of $50K at 5% for 5-years. The weekly amort sched payment would be $217.44 The bi-weekly amort sched payment would be $435.06 Suppose you paid the loan on a bi-weekly schedule but using the 2 times the weekly amort sched amount... the difference in interest over 5 years would only be $27.13 $27.13 is extremely immaterial. And that's on the max loan, most of yours will be much less.

I agree w/ jpod, since your place already says "employment" rather than "service", you're basically where you need to be already. EGTRRA amended the Code section covered by Rev Rule 2000-27, so it doesn't apply... but you can see in the "Holdings" of that Rev Rule that the Service makes distinction between "termination of employment" and "separation from service", which futher concurs w/ the consensus that your plan is fine.

It appears to me that while it's limited in what expenses are covered, it's still an FSA, so the overall FSA rules apply.

The key is Appleby's 2nd paragraph... "There are no MRDs for this year." Thanks to Congress, there is a temporary waiver of MRDs for 2009. Even if your plan sends you money which it says is an MRD, it's not really an MRD for purposes of your personal taxes. See IRS Publication 575, page 26, "Temporary waiver of required minimum distributions for 2009".

http://www.irs.gov/pub/irs-pdf/p590.pdf See page 54, paragraphs w/ heading "Beneficiary". Best thing is to keep it as a beneficiary account for now. Worry about what change to make to avoid MRDs in year that participant will have been 69 (better a year early than a day late). Oh, and she doesn't have the 10% penalty in the plan or (I think) an inherited IRA because it's due to death (form 5329 line 2 exception code 04).

IRS Publication 560, page 4, definition of "earned income". http://www.irs.gov/pub/irs-pdf/p560.pdf Unless you're filing some other form or schedule related to your royalty income, then generally speaking, net income on Sched C is net earnings for an SEP.

How do you report it on your tax return? What form or schedule?

You really should familiarize yourself w/ the instructions for sched SSA which I linked above. It gets a bit convoluted... if the participant has received all or some of their accrued benefit, then you don't report, unless they've stopped receiving it in which case you then might have to report them, etc. And the important one is if you report them, then you have re-report them if they zero out their account later on.

http://www.irs.gov/pub/irs-pdf/i5500.pdf Instructions page 64, for "line 4, box h": "For defined contribution plans, enter the value of the participant’s account at the time of separation."

Guess I should have worded it that if the hardship enables the employee to actually "purchase" (ie complete construction and move into) the home, then it would fulfill that requirement. In this scenario, it's the "purchase" that matters and not the avoidance of the construction loan default.

Time out... Are we talking about 1.401(a)-11(a)(2) or 1.411(a)-11©(3)? See the cite in the original post.... as the subject addresses QJ&SA, I'm thinking we have a criss-crossed question.... the question really means the 401 reg but the $5,000 change was to the 411 reg.

The regs say: (2) Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments); ... (4) Payments necessary to prevent the eviction of the employee from the employee's principal residence or foreclosure on the mortgage on that residence; The construction costs might have qualified but you now have specific knowledge that the employee is defaulting on the loan and presumably ceasing construction prior to completion, which means the property in question will not become the employee's principal residence. Same for foreclosure; it never became a principal residence. It's a tough situation but fails to meet the IRS's very narrow definition of a hardship. EDIT: now if taking the hardship would prevent defaulting on the construction loan and enable the employee to move into the constructed house, thus making it a principal residence, then it would be good.

Yep, you asked correctly. Can elect zero withholding... but from my experience should be highly discouraged. At the very least, make it clear that if the employee fails to have enough cash when they file next April, they can't come back to the plan for those taxes (because it's being given to them now).

IMO, the key question is: Was 35% a reasonable assumption at the time of the withdrawal?