masteff

This is the way I would have interpretted it in my last position as 401(k) administrator... I see it as split between the plan's rules and the IRS's rules. The plan only allows in-service distribution on event of a hardship. So for plan purposes, the employee has a hardship withdrawal. But for IRS purposes, age 59 1/2 is the earlier event. Reg 1.401(k)-1(d)(1)(ii) says "attainment of age 59 1/2 or the employee's hardship". Either is an acceptible event to permit the distribution of elective deferrals, so the earliest one counts first. So for the IRS, this is rollover eligible money and therefore subject to mandatory withholding rules.

On your Sch C question, that's beyond the scope of this board. Here's a link to the instructions for the form. It discusses that change. http://www.irs.gov/pub/irs-pdf/i1040sc.pdf As to which plan to use, it would be most likely that she would contribute to yours as it is the plan for that specific business. You should talk to the financial company you have your plan with about their procedures for when another person is added. Does anyone else have an opinion on the question about whether the wife would use her own or use his plan?

Since we're dragging out the soap boxes... Don't forget at the same time to make a list of where everything is located (e.g., name of financial institution, type of account and account number). I just opened a new brokerage account online, they send nearly everything by email, would take my family forever to discover that one on their own. Had the family in the original post in this thread known where the account was, they could have dealt w/ this in the original estate returns instead of having to potentially reopen the estate.

Not that it's an official source but this Prudential analysis concludes that non-spouse benes cannot rollover Roth deferral accounts. http://www.prudential.com/media/managed/Pe...nalRothregs.pdf

Does anyone more current than I on plan audit standards know if 1099's are truly a required document? Frankly, having done some fraud work, cancelled checks are much higher on the list of credible evidence of the transaction (especially when coupled w/ the distribution request forms and trust statements showing the disbursement). My first thought was what Janet suggested about sending confirmation letters to those six participants. Or perhaps what they're truly testing w/ the 1099's is the subsequent tax reporting and not the distributions themselves. My thought is if this is only piece that's missing, then escalate w/in the audit team to see how hard and fast they are about needing the 1099's. Often a staff level auditor is working for a preprinted audit plan which says "get copies of 1099's". A higher level auditor would be needed to make the judgement call that other documentation is sufficient for a particular audit step. Definitely ask to go up the chain of command before accepting an adverse or qualified opinion.

http://news.yahoo.com/s/ap/20080207/ap_on_...conomy_stimulus Here's the latest. Senate passed a similar package that added seniors and veterans to the list of people to receive checks.

Here's an idea... she could have her signature notarized w/ the notary seal directly on top of her signature which would make it extremely difficult for the trustee to manipulate. This way the plan would know it's a valid signature and she'd have a measure of security about her signature not being replicated onto some other document.

Problem #1: she wants to submit the signed papers to the financial institution directly herself? Nope. The fraud auditor in me says no way. Problem #2: the financial institution is not the plan administrator. What documentary evidence would the plan have to prove she properly requested the distribution if you don't have a copy of her signed form? When the IRS/DOL comes calling, you need to be able to show proper consent from the participant. Question: are you TPA and is this person local to you such that she could come to your office and you could be in control of the copy of her signature and not the trustee? (I'm assuming it's the trustee she doesn't trust rather than you.) PS - on the home made forms thing... I'd bet the financial institution wouldn't like them. Might be worth contacting them and asking if they accept requests on home-made / non-standard forms.

I tried to think thru scenarios whereby the recordkeeping and 2005 form 5500 could be amended but there would be too many problems. The most straight forward answer I can think of is: Take $4000 (plus earnings/losses) from the participant to the forfeiture account. This puts the participant in the proper position for 2005. Do 2006 normally. Allocate the forfeitures per the plan document to anyone who doesn't exceed the 2006 limits. (Mostly what you stated above, but not applying the $4000 against his 2006 amount, rather, doing it as two distinct steps.) P.S. - to your question about doing nothing, just taking the prior recordkeeper's numbers and moving forward... I'd at least give the client written notice about the discovery and let them decide whether to ignore it or to fix it.

Was the last $4000 in this person's account actually deposited in 2005 or in 2006?

So in 2005, he received $46,000? And the problem is that the $4,000 catchup was improperly recorded as deferrals instead of as catch-up? Sounds to me like a recordkeeping error and all it needs is a recordkeeping correction. Move the $4,000 plus earnings/losses from the improper source to the catch-up source. Note: can't make catchup w/out maxing out normal deferrals, so he should have had money in the 401(k) source if the plan allows deferrals (and he's not restricted from making them as an HCE); multiple sources may be out of whack and need to be reallocated.

In addition to Kim's excellent observation, I thought I'd make a comment about 59 1/2. While a normal IRA owner has to pay a 10% early withdrawal penalty prior to age 59 1/2, one exception is when a distribution is made on account of death. So no penalty would apply. However normal taxes would still apply and future earnings will not be tax deferred as they were inside the IRA. Links to IRS Form 5329 form and instructions.

You equivocate. You have stated in your article that the "inalienable" right to due process has been abridged by ERISA. Your conclusion is that ERISA needs to have damages restored in order to restore said due process. Again, please provide some form of fundamental argument that supports your supposition that damages are a component part of due process.

I was unimpressed by your article but am even more unimpressed by your Dooms Day proclamation. Resorting to emotional arguments and threats is a sure sign of weakness. Please prove to me that the ability to sue for damages is an essential and inherent part of due process.

Okay, the new Pub 15-A didn't give anything but I feel the new Pub 575 gives some indication of the Service's intent.... http://www.irs.gov/pub/irs-pdf/p575.pdf See page 29, Table 1. In the "Result of a direct rollover" column, for "When to report as income" it notes "However, see Rollovers to Roth IRAs, earlier, for an exception." The Service would not have added this as a note under direct rollover if it intended that rollovers to roths were somehow not included in the general category of "direct rollovers". I feel this clearly shows that the Service does view it as a direct rollover and as such is not subject to withholding. Oh, and pub 575 does confirm there's no 10% penalty.

It's possible that certain workstations do not have the proper Excel add-in loaded. In Excel, go to Tools on the menu and then down to Add-ins. My thought would be "Analysis ToolPak"; next thought would be "Analysis ToolPak - VBA". See if selecting the add-in helps the situation.

I would agree; an ACA/EACA/QACA is not specified by the regs as a condition to either having a QDIA or providing the QDIA notice. A possible point of confusion is that the ACA notice and the QDIA notice can be combined. http://www.dol.gov/ebsa/regs/fedreg/final/07-5147.pdf

Note: I edited my last post to have a direct link (finally found how to get there directly, not exactly straight forward). Question: anyone else noticed that the $300 per child is based on the child tax credit and therefore the kid has to be under 17? (People in the office were talking and asked me if I knew anything about it; thanks to jevd for the link to the actual bill). Also, reading the bill, the check you get will be based on your 2007 status but the actual credit will be calculated based on your 2008 tax return. (Anyone read it differently?)

Link didn't quite work (message: "Search results are only retained for a limited amount of time")... go here: http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.5140.IH:

The exact words in the regs are "based on the participant’s age, target retirement date (such as normal retirement age under the plan) or life expectancy." I'd see nothing wrong w/ using ages 65 or 67 as those are universal retirement ages (but would welcome dissenting opinions for anyone who's looked more closely at QDIA's than I have). The regs can be found here: http://www.dol.gov/ebsa/regs/fedreg/final/07-5147.pdf

For the sake of dissenting opinion, let me take a moment... I've found that only a few features in Vista are truly obnoxious... and were easy to turn off once I took a moment to find out how (Aero desktop theme and User Account Control to name two specifically). Only our payroll software was non-Vista compatible and that was solved by using a virtual machine (an installation of XP that runs inside a shell in Vista). I now have Vista at work and at home. I'm perfectly content w/ it in both places. Now, your question about "can it be impossible to load XP on a Vista machine?" Yes. The problem arises if the hardware is very new and therefore doesn't have XP compatible drivers. This will become a bigger and bigger problem as time goes by. If you choose to buy a computer loaded w/ Vista and then revert to XP, I'd encourage you to find various user forums on the internet where people have posted their own experiences w/ that model of computer.... and more importantly have posted links to where they found the necessary drivers. (Suggestion #2 is that you not reformat the Vista harddrive but instead buy a new harddrive, swap the drives and use the new one, leaving the Vista one in case you reach a point you can't get XP to work. That's the biggest mistake I've seen on the Dell forum "help, I reformatted my harddrive and now I can't do anything".) A word of caution (and this is the only really techie thing I'll say), many new computers have a SATA RAID controller build into the motherboard and, to install XP, you have to have the RAID drivers on a floppy/cd so the OS can recognize the harddrive via the RAID controller. W/out the RAID drivers, you can be dead in the water before you even get started. Again, a computer user forum can help you help you figure out ahead of time if this is an issue w/ a particular brand/model and help you locate the proper driver.

Yep, as long as you're under the income threshholds for the IRA deduction, you can max out both. IRS Publication 590 has helpful information (if you're not already aware of it ) http://www.irs.gov/pub/irs-pdf/p590.pdf

Our SOP would be a letter to the participant that $xxx is rollover ineligible and if rolled over should be removed.

In the OP's latest post, the follow-up question was to the effect of "wouldn't we have to amend the def of comp?"... to which the answer is "no, the amendment would be to the def of deferral election". Just because the plan doesn't allow slicing and dicing now doesn't mean it couldn't... assuming the company really cared enough to go to the effort and cost to amend the plan.

Here's another titillating tidbit to tease your coworkers with.... this article on Yahoo says: "The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps are higher for those with children." So a few more people might sneak in for partial rebates (only fair versus a hard cut off at $150K).