ERISAnut

No, it isn't. In this instance, she has taken a distribution (which could have been rolled over to an IRA or even spent). Therefore, this rollover takes on the characteristics of the new plan; becoming divorced from the old plan. When looking at related rollovers, you would normally think of a situation where the money is really not available for distribution to the particpant and is transferred to the other plan for housing. In such instance, the characteristics from the old plan will remain in tact. Hope this helps. I acknowlege that it is the same plan, but is treated as if it is rolled from another plan since she is spouse beneficiary instead of the actual participant with respect to those funds.

Of course he can. His overall limit, by the same principle you used, would be $20,500. So, he could simply to $10,250 in each one; and he is fine. You won't find this answer within the SIMPLE IRA rules; as each SIMPLE IRAs rules applies to that specific employer. 402(g) applies directly to the taxpayer. $15,500 plus $5,000 is what the taxpayer is allowed to do. If that comes from two SIMPLE IRAs, or $15,500 to a 401(k) and $5,000 to a Traditional IRA (assuming under the phaseout limits), then that works. Just ensure those employers aren't related.

This rule applies only when the SEP is written to an IRS Form 5305. If you wish to use the SEP with another plan, then you would need to use a SEP prototype.

Do not forget to reduce each partners 'earned income' be their respective employer contributions (which should be equal). So, as your allocations to each exceeds ($20,000), their earned income will get reduced below $80,000. The 20% is merely the front end calculation to arrive at a 25% allocation rate. So, if they each receive $30,000, their earned income will become $70,000; an allocation rate of 42.86%.

Of course he will. Earned above the HCE Comp threshold during the prior year; or was a 5% owner at any time during the current or prior year. Hope this helps.

Use Code "G" in box 7. Report the total amount rolled in box 1, the taxable amount in box 2a, and the basis recovery in box 5. Hope this helps.

The first requirement for satisfying the ACP safe harbor is that you first satisfy the ADP safe harbor. How do you satisfy the ADP safe harbor when ADP doesn't exist? I wouldn't implement a matching contribution, but instead use a nonelective if they are adverse to testing.

No, this would be a design issue, not an administration issue. An administration issue would be to make the loan approval when such application is received (in the event loans are allowed). Since loans are not allowed, there is no approval, or disapproval, to be made.

None. There is mandatory disaggregation when testing Union and Non-union. Therefore, when testing the union for coverage, no one benefits for matching.

Even Bob Architect agrees with this. This issue you just illustrated is that prior to 2009, a 403(b) cannot be 'terminated' since it is not a plan. This one premise has served to upset the entire 403(b) world. Beginning in 2009, terminating a plan would require all assets get distributed within 12 months. So, what does that say about 403(b)s that were terminated in prior years? It says that regardless of what one may believe, those arrangements were not terminated; but merely frozen. It also says that they are required to be written because they are 403(b)s that have not been terminated. However, any accounts that existed and were inactive prior to 2005, they do not have to be considered. There is a serious issue with contracts for employees after 2005; where a plan is required to be written. JSimmons, I am with you; the rules appeared to have created more problems that they solve. But, these are the rules as communicated (informally) by the IRS. I do not believe many of these are enforceable because they are impossible to comply with in many instances. However, going forward, the projection is that the industry will begin to produce products and programs to operate consistently with these rules; making 403(b)s more controllable. As it stands now, for every rule stating one thing, there is another stating the opposite.

Bob stated that while the information sharing agreement wasn't necessary for the members of the selected providers, there was still the responsiblity of each member to ensure overall compliance with the rules. As a practical matter, an information sharing agreement is among the few alternatives available to effectively ensure loan limits aren't exceeded and improper distributions aren't made. Now, for going outside the selected provider list, the information sharing agreement would be necessary in order to ensure compliance. Inside the selected provider group, such agreement is not required, but is likely the most effective mechanism to ensure compliance. So, you are right, but the ISA is just a safe guard. It is basically being over-protective since is really isn't required for members fo the selected group.

Agreed. 1000%. Some people just want to overthink the SIMPLE ...

The definition of compensation used for the SIMPLE IRA is withholding compensation. Therefore, it does not get used until it becomes subject to withholding; January 2009. Hope this helps.

When you execute a plan document, this becomes a binding agreement subject to all the rules of ERISA. Unfortunately, there is nothing you can do but a prospective amendment to be applied to future hires. Once a document is signed and communicated to employees, this creates protections that cannot be eliminated; regardless of the intent of the employer. You can try VCP, but that will likely prove more expensive that those amounts you are attempting to save. Even then, the IRS will not likely allow you to do it.

NO, he does not. While the first distributions from the plan must satisfy the RMD, in this case there is not RMD due to the beneficiary. Since the taxpayer actually died prior to the RBD, the death distribution rules effectively preempts the need to take the first Age 70.5 RMD as this was not due to begin until April 1, 2009. Now, this would be different had the RBD been reached, and another RMD would be due on January 1 of the current year, but by December 31st of that year. Therefore, the first death distribution to the beneficiary is not due until December 31, 2009 (the end of the year following the year of death) since the taxpayer died in the year he turned 70.5. I am assuming the beneficiary is the spouse, but with this particular fact pattern, it does not matter. Hope this helps.

Sure, if they entered ASG status for the first time during the current year, they can get added to the plan as a result of the 'related group status' becoming effective.

Am I correct in saying you'd prioritize your contributions as: 1. 401K to employer's match (no more) 2. Full Roth contribution 3. 401K to max? Typically, yes. But each case is different. 401(k) to the match limit would, depend on vesting schedule and how long you expect to remain with the employer. But, that is a safe number 1 99% of the time. Everything else would largely depend on your current tax bracket, and what you expect tax rates to do in the future. A zero tax rate (Roth) is certainly a compelling case for prioritizing before an immediate tax deduction. Again, each case is different. Many variables to consider.

Who is the trustee for the plan? As TPA, I would follow the explicit instruction of the Trustee for the plan. As trustee, I would say heck no! Should keep good documentation, explicit instruction from the plan's Trustee & maybe even a hold harmless agreement.

You typically do not have to split hairs on these types of issues. The fact that he is purchasing a residence deems a hardship to exist. This is regardless of anything else (i.e. other debt). Now, as to whether a distribution is necessary in order to satisfy the hardship is a separate analysis. Even here, a distribution is deemed necessary if maximized all other distributions available under all plans of the employer, etc........... Therefore, I would not put too much stock into what he actually does with the funds once received. The rules are written to make the determination easy and avoid your analysis. Is he purchasing a house, yes. Is a distribution from the plan necessary in order for him to purchase the house; maybe. But it is deemed necessary when the certain conditions are met (i.e. suspending additional contributions for 6 months, etc....) Please forgive me for not providing the exact details, but they would be well documented in the plan. Hope this helps.

I think the simpliest way to explain it would be the following: Each plan would: 1) Have One Plan document governing the plan 2) Complete one form 5500 for year end 3) Have as many trust "accounts" and third party administrators as the client decides to hire. Number 3 will not affect 1 & 2. So, if two Forms 5500 were completed for the 'same plan', then you would need to do an amended return which provides aggregate figures from both trust accounts. The other provider would have likely included a beginning balance of zero on their Form 5500. Simply put, you have to find out what is going on and get it consistent with items 1, 2 & 3 above. Hope this helps.

Yes. He can defer $20,000. Remember, the catchup does not count against the 415 limit; while it does remain at 25% of SEPs (SARSEPS). You should ensure the other rules are followed as well.

This is new to me; as I haven't seen the reg. It doesn't seem to make sense. What I typically do is refer the language inside the BPD (IRS approved, of course) to determine whether or not the plan is actually written consistent to my interpretation of the Reg. In looking at a BPD, I cannot verify it. Of course, we know when the plan's language contradicts the Regs, you must follow the Regs. Arguably, the IRS's opinion letter would imply they read the provision and shares the same opinions on how the Regs are interpreted. Hope this helps.

They are very flexible in that regard, especially when you have contributed a large amount over several years. Penalty and Tax Free distributions of the amounts you contributed; and they come out first, leaving the earnings behind.

Anyone eligible in the plan would be impacted- myself included. i am invested currently 100% in a target fund yet at any time currently I can move 100% of my money to the brokerage link. With the change I will be limited to 90%. I guess at the time I do the money move I would be notified but I would think I should be notified prior to that time Yes. You should still be notified. As a participant, you are entitled to have accurate information for your vetting process. Just think, would it be fair to you to have a false impression of being able to invest 100% in an account where you are limited to 90%. Without getting too involved in the particular details stating, "so what, you will find out soon enough anyway" would set an improper precedent, even though the notion of an adverse impact may be debatable. There really shouldn't be a reason to not communicate this to all plan participants when considering the potential ramifications for not doing so. It's more of a judgement call, but I wouldn't contemplate not notifying everyone.

The 10% during he 5 year rule is for distributions of amounts that were converted to a Roth IRA (and were exempted from the 10% penalty because the taxes were due to the Roth conversion). So, if you converted a Traditional to a Roth and were exempted from the 10% early withdrawal penalty, then if you withdraw any of the converted amount within 5 years, the 10% penalty will apply (unless you reach 59 1/2 or some other exemption applies). You can always withdraw amounts that you actually contribute without penalty. The rule you are referring to are for amounts actually converted. Hope this helps.