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I always thought it worked the way Luke indicated, and this is confirmed by language quoted above from Pub 560. Both "self-employed individual" and earnings from self-employment (and earned income) are defined earlier in that Publication. For example: "Self-employed individual. An individual in business for himself or herself, and whose business isn't incorporated, is self-employed. Sole proprietors and partners are self-employed." And "earned income" as used 404(a)(8)(C) is defined in 404(a)(8)(B) by reference to 401(c)(2) (net earnings from self-employment).

Does the plan document allow employees to increase their installment payments?

No specific language is required. One concern is that IRA owners be able to identify the source of their IRAs so that they keep inherited IRA funds separate from their own personal IRAs. Another concern is ensuring that the inherited IRA trustee to trustee transfer is recognized (and nontaxable). Per the IRS: "However, the beneficiary can make a trustee-to-trustee transfer as long as the IRA into which amounts are being moved is set up and maintained in the name of the deceased IRA owner for the benefit of the beneficiary." (The source of this isn't Notice 2007-7, which dealt only with transfers from qualified plans to IRAs, but Rev Rev 78-406 and several subsequent private letter rulings which held that IRA to IRA transfers, including inherited IRAs, are not distributions or rollovers.) Your broker's language doesn't even make literal sense, as it seems to have a word missing (presumably "beneficiary") before "of." As Bird suggests, the language is unlikely to invalidate the transfer, as the prior owner is identified, and you have no control over the new broker's titling protocol (if you have anything in writing from them, keep it.) But clearly it would be "better" if they added the word "beneficiary." One other point. You shouldn't get a 1099R from your current broker for this transaction. IRA to IRA transfers generally aren't reportable events if you're not getting any cash. And they aren't reportable by the new broker on Form 5498 either. So the only reportable event will likely be a 1099R when you take the money out of the inherited IRA, and by then maybe your new broker will have fixed its titling problem. Curious about why you "really need" to consolidate this IRA with the new broker...

And additional explanation from the Service: "Another question that we often hear is how salary deferrals are made when a person is self-employed or involved in a partnership. The person doesn’t usually know for certain what their income will be until the end of the year, or later. The final 401(k) regulations address this issue. The regulations state that a partner’s or self-employed person’s income is deemed available to them on the last day of their taxable year. And since an employee must have a deferral election in place before compensation is available, a self-employed person may not make a cash or deferred election with respect to compensation for a partnership or sole proprietorship taxable year after the last day of that year. If a partnership provides for cash advance payments paid to the partner during the taxable year that is based on the value of the partner’s services prior to the date of payment (and which do not exceed a reasonable estimate of the partner’s earned income for the taxable year), the individual can defer a portion of these advances even though their final compensation has not yet been determined. Obviously, if the self-employed person wants to maximize their contribution, they can’t do so until their final compensation has been determined. That is o.k. as long as the election was in place as of the last day of the taxable year. Bottom line, self-employed participants may defer against 'advances' or 'draws.' ... Lastly, employer contributions are not required to be made until the due date of the employer’s tax return, plus extensions. So, in the case of a sole proprietor, this is when the 1040 is due – October 15, if an extension was filed."

No, her life expectancy is irrelevant. She can continue the RMDs her husband was receiving, or she can take a lump sum. As always, check the IRA document which may be more restrictive.

Brother was beneficiary of an inherited IRA. Since he is a nonspouse beneficiary brother was not entitled to treat the IRA as his own. Since he was never the IRA owner, his spouse can not treat it as her own. She continues in the shoes of the prior beneficiary (her husband).

As to your original question, FWIW the IRS has an FAQ here that includes the following: "If you’ve made contributions to a 401(k) plan based on a shareholder’s S corporation’s distributions, find out how you can correct this mistake."

Just for clarity, ERISA regs define "pension" plans to include all retirement plans, defined benefit and defined contribution. (In contrast to "welfare" plans.) Perhaps the original poster was using the term in similar fashion.

Correct. Even if they were separate plans (and it's not clear if we are talking about 401(k)s, 403(b)s, or both) all loans under all the plans of the employer (including controlled group/common control/ASG plans) would be aggregated for purposes of the $50,000 limit.

Agreed, original question wasn't very clear. If the question concerns reporting, Box 5 of the 1099R specifically requires reporting the portion of the distribution that's basis, without regard to whether the distribution is qualified or nonqualified. Mike- good point.

Generally agree with Luke that there is no practical reason for continuing to account for basis/earnings after an employee reaches age 59 1/2 and satisfies the 5 year holding period. (I'm also assuming there's no state tax reason for doing so.) But IRS guidance may technically require it. For example, the separate accounting regs, at (f)(3), state: (3) Separate accounting required. Under the separate accounting requirement of this paragraph (f)(3), contributions and withdrawals of designated Roth contributions must be credited and debited to a designated Roth account maintained for the employee and the plan must maintain a record of the employee's investment in the contract (that is, designated Roth contributions that have not been distributed) with respect to the employee's designated Roth account. In addition, gains, losses, and other credits or charges must be separately allocated on a reasonable and consistent basis to the designated Roth account and other accounts under the plan. However, forfeitures may not be allocated to the designated Roth account and no contributions other than designated Roth contributions and rollover contributions described in section 402A(c)(3)(B) may be allocated to such account. The separate accounting requirement applies at the time the designated Roth contribution is contributed to the plan and must continue to apply until the designated Roth account is completely distributed. A-13 of § 1.402A-1 for additional requirements for separate accounting. And the regs also contain this Q&A: Q-7. After a qualified distribution from a designated Roth account has been made, how is the remaining investment in the contract of the designated Roth account determined under section 72? A-7. (a) The portion of any qualified distribution that is treated as a recovery of investment in the contract is determined in the same manner as if the distribution were not a qualified distribution. (See A-3 of this section) Thus, the remaining investment in the contract in a designated Roth account after a qualified distribution is determined in the same manner after a qualified distribution as it would be determined if the distribution were not a qualified distribution. However, the example the IRS provides deals with a qualified distribution due to disability, and notes that "This determination of the remaining investment in the contract will be needed if C subsequently is no longer disabled and takes a nonqualified distribution from the designated Roth account."

Agree, except that you need to file a separate 1099R for the designated Roth account. Agree, except that the same result applies regardless of how old the account is.

No. The date the first loan is taken out is irrelevant. This is a statutory limit, set out in section 72(p) of the Internal Revenue Code.

Yes. Here's the technical calculation per the IRS: 7. Jim, a participant in our retirement plan, has requested a second plan loan. Jim’s vested account balance is $80,000. He borrowed $27,000 eight months ago and still owes $18,000 on that loan. How much can he borrow as a second loan? Would it benefit him to repay the first loan before requesting a second loan? Jim will only be able to take a second loan if your plan’s terms allow it. You’ll find how to determine the maximum amount Jim may borrow in IRC Section 72(p)(2)(A). The law treats the portion of the loan that exceeds the maximum amount as a distribution. Generally, any previously untaxed amount of the distribution is taxable. We’ll use the facts in your question to calculate Jim’s maximum allowable loan balance. The new loan plus the outstanding balance of all other loans cannot exceed the lesser of: $50,000, reduced by the excess of the highest outstanding balance of all Jim’s loans during the 12-month period ending on the day before the new loan (in this example, $27,000) over the outstanding balance of Jim’s loans from the plan on the date of the new loan (in this example, $18,000), or The greater of $10,000 or 1/2 of Jim’s vested account balance. Maximum second loan if amount still owed on first loan Jim’s current loan balance is $18,000. This amount plus the new loan cannot exceed the lesser of: $50,000 – ($27,000 - $18,000) = $41,000, or $80,000 x 1/2 = $40,000 Jim’s total permissible balance is $40,000, of which $18,000 is an existing loan balance. This leaves a new maximum permissible loan amount of $22,000 ($40,000 - $18,000). Maximum second loan if first loan repaid Because the law bases Jim’s maximum loan on all of his loans during the 12 months prior to the new loan, there isn’t a significant advantage for Jim to pay off his first loan before requesting a second. If Jim repaid the $18,000 before applying for the second loan, he would be limited to the lesser of: $50,000 – ($27,000 – 0) = $23,000, or $80,000 x 1/2 = $40,000 In this case, the maximum permissible loan amount would be $23,000.

"The participant could roll the money to an IRA now, and then take the withdrawal as a first time home buyer from the IRA, penalty free." only up to $10,000.

Assets would be qualified (fully nontaxable) after 5 years, combining mother and daughter holding periods. There are no special rules for Roth post-death RMDs- the penalty is 50% of the amount that should have been distributed, but wasn't, each year. You might want to take a look at IRS Info Letter 2016-0071. And also research how many years back the IRS can look in this situation. Good luck...

There are also several court cases holding that a divorce decree can be a QDRO. But there is a sharp split in the Circuits on how a plan administrator should determine whether the DRO "clearly specifies" the information required for a QDRO. If you want to dig down further on this, look at the 2017 6th Circuit decision in Sun Life v Jackson and the Scotus filings (cert denied).

The First Circuit has ruled against the ex-spouse in the Tatupu v NFL case. But the decision may be of limited importance. Here's a Bloomberg Federal Tax Blog summary. "In the end, however, the First Circuit avoided deciding the nunc pro tunc question, cautioning that its narrow ruling was based only on the specific facts of the MSA and Tatupu’s lump-sum election."

I agree. Also, employee contributions are included in determining the present value of accrued benefits for top heavy purposes, which seems to support this conclusion.

Admittedly having done no research on this, it's no longer his benefit, so I would think that not only is the plan not obligated to provide the information, it would be wrong to provide the information. What if he asked whether a co-worker had started receiving his/her benefit? (Although what possible adverse ramifications could there be if the plan stupidly did answer his question?) And since the husband isn't making a claim for benefits, and he hasn't been denied anything (except information not applicable to his benefit), I don't see how the claims appeal process is possibly implicated.

Kitces had a very good article about this last year.

I believe the answer is that the indexing statute applies only to penalties enforced or assessed by federal agencies. The 502(c)(1) penalty isn't enforced or assessed by the DOL. It's enforced by participants and assessed by the courts. So no adjustment.

If for some unlikely reason the above doesn't work for you, you also have the option of amending your 2017 return to treat your IRA contributions as nondeductible (you'll have to forever track those contributions on Form 8606 an nontaxable basis). Unfortunately it's too late to recharacterize those contributions as Roth contributions.

As far as guidance, the DOL's regulations are fairly detailed regarding which changes require an additional notice, and when. Section (c) requires additional notices for changes to certain general plan information (for example, identification of the plan's investment alternatives) and also changes to administrative and individual expenses. Section (d), dealing with disclosure of investment-related information, does not mandate any interim notices as long as a website provides the required information. Additional general guidance is also provided in Field Assistance Bulletin 2012-2R.

From IRS Model 402(f) Notice: "If your payments for the year are less than $200 (not including payments from a designated Roth account in the Plan), the Plan is not required to allow you to do a direct rollover and is not required to withhold for federal income taxes. However, you may do a 60- day rollover."