Gary Lesser

It would appear she is entitled to a 2007 (and 2006) contribution. This ERISA plan could be disqualified. All eligible employees must participate. The uniform allocation formula has been violated, and all contributons for year may have to be considered as excess contributions in the IRA and rendered non-deductible by employer. In general, and assuming this is not an intentional error, restoritive contributions should be made with interest as soon as possible. I believe the DOL has a calculator that can be used to calculate interest. See too, Rev. Proc 2006-27 (EPCRS), Section 6.10 regarding SEPs and Section 8.01 and 8.02 reagrding factors and requirements for self-correction of errors that are not egregious and not significant. The longer one waits to fix an error, the more likely self-correction can not be used as a fix. Hope this helps.

It would be best to discuss this with the document provider. The termination may have no effect until the plan year is over. You may wish to see the following: 1. Update on Interim Amendments and EGTRRA Restatements 10/09/2007 Excerpt: The purpose of this article is to provide you with an update on (1) interim amendments that may be required in the near future, (2) the EGTRRA restatement process, and (3) the implementation of certain PPA provisions. http://benefitslink.com/links/20071009-056474.html 2. IRS Adjusts Determination Letter Application Cycles 06/14/2007 Excerpt: The Internal Revenue Service (IRS) has issued Revenue Procedure 2007-44, which modifies plan amendment and determination letter application cycles for plans to accommodate provisions in the Pension Protection Act of 2006 (PPA) including permanency of the Economic Growth Tax Relief and Reconciliation Act (EGTRRA). http://benefitslink.com/links/20070614-053627.html

If the SEP is maintained on a calendar year basis (e.g., 2007), the deduction for the contributions made for the calendar plan year will not be deductible until the fiscal tax year end of 6/30/08. Thus, deductions are off-cycled by 6 months. If the plan year and fiscal year are the same, the deduction is claimed sooner (that is, shortly after the end of the plan year). Either way, contributions have to be made by the due date of the federal return(s). If the plan has a fiscal plan year it may (or may not) be easier to maintain records and administer the plan. If the plan year is not the same as the employer's taxable year, "compensation" for deduction purposes (the 25% limit) is compensation paid to the eligible employee during the calendar year ending in the employer's taxable year. Depending on the level of contributins (if high) and lower earlier wages (if low), the deduction limit could be affected with a calendar year plan. [iRC 404(h)(1)(A)] A prototype SEP will be needed to utilize a the fiscal year as the plan year. Hope this helps.

Merriam-Webster's Dictionary of English Usage is more descriptive than prescriptive, but it advises, "You choose the article that suits your own pronunciation." Theodore Bernstein gives the straight vowel-sound vs. consonant-sound explanation but allows that one should indeed say "an hotel" if they think hotel is pronounced otel. To avoid confusion, perhaps we should all consider using "an H.S.A." or just 'h-s-a" (see below) I tend to use "an HSA" exclusively, using the "an" to signify that a hard letter pronounciation (H in this case) follows (e.g. An FBI agent...). That being said, I think "a hissa" would also be correct because the period are missing between the letters (but marketing would never listen). When I do not see periods between letters I tend to pronounce what follows as a word rather than reading the letters, except when "an" is used. I.R.A. was shortened to IRA. FWIW, there is only one instance of "a HSA" in the 3rd Edition of the HSA Anwser Book. [i'll correct that next year.] I once globally replaced "a health savings account" which I wrote a few hundred times with "an HSA" and it worked just fine. I've also learned to stop Word from changing "HSA" to "hsa." Unquestionably it would; especially if for someone (not you) that thinks "Harmonica" is pronounced "AYE-monica." <grin> "Y.M.C.A." (lyrics) Young man, there's no need to feel down. I said, young man, pick yourself off the ground. I said, young man, 'cause you're in a new town There's no need to be unhappy. Young man, there's a place you can go. I said, young man, when you're short on your dough. You can stay there, and I'm sure you will find Many ways to have a good time. It's fun to stay at the y-m-c-a. It's fun to stay at the y-m-c-a. ...

Yes, it is refreshing. However, if the owner is age 59-1/2 (or another exception applied) he or she could make the contribution and withdraw it soon thereafter. A small amount must usually be left in the account so that it doesn't automatically close. Technically, an employer makes a contribution (to/under the plan); it is then allocated to eligible employees in accordance with the plan document. The actual allocation can be made by the employer or the trustee/custodian. Thus, all eligible employees should be receiving contributions at the same time.

Approval letter found - pdf attached (the dates (1/2003) seem to match). Has anyone found any other examples of dual eligibility? Pershing_SEP_Opinion_Letter.pdf

I'll try. "GUST" refers to the laws that contain the provisions that are required to be incorporated into retirement plans. • Uruguay Round Agreements Act, Pub. L. 103-464 ("GATT"); • Uniformed Services Employment and Reemployment Rights Act of 1994, Pub. L. 103-353 ("USERRA"); • Small Business Job Protection Act of 1996, Pub. L. 104-188 ("SBJPA"); • Taxpayer Relief Act of 1997, Pub. L. 105-34 ("TRA '97"); • Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206; and the • Community Renewal Tax Relief Act of 2000, Pub. L. 106-554. [see neat chart at PAI's site at GUST Chart (regarding first four items).] Now to answer your question (as best I can). I do not keep track of all the GUST deadlines (see list below). However, for USERRA (and the Code Section 72 changes relating to a penalty exception for an early distribution because of an IRS levy) there wasn't much that I recall that would have much of an affect on a SEP plan document; more so, however, with a SARSEP document. [uSERRA is mainly covered in Chapter 5 of the SEP...Answer book]. Model Forms. To the extent the model SEP (Form 5305-SEP) was required to be updated it was. The most recent version of the model SEP (Form 5305-SEP) was issued in December 2004 does not require that it be executed by an employer that had previously adopted a SEP using the model form. However, an employer initially establishing a SEP should use the December 2004 version of the model SEP. I do not recall there being any GUST amendment the IRS deemed necessary to include. Prototype (etc) Forms. The Simplified Employee Pension (SEP) Listing of Required Modifications and Information Package (SEP-LRM) [3-2002] contained samples of plan provisions that satisfy certain specific requirements of the Internal Revenue Code, as amended through the Job Creation and Worker Assistance Act of 2002 (Pub. L. 107-147). So presumably, it contains all of the required provisions that are needed for master and prototype (etc) plans (and I don't recall there being any). Perhaps the IRS has required that such matters be contained in the SEP or IRA disclosure statement, but I have not been following that item. Maybe someone will enlighten us on recent developments in that area. [see DOL. Reg. § 2520.104-48 and -49(a)(3)] Hope this helps. [GUST SUBMISSION DATES. The exact GUST submission dates are contained in several Revenue Procedures- see Rev. Proc. 2007-49 IRS ALERTS PLAN SPONSORS TO CONSEQUENCES OF SUBMITTING LATE APPLICATIONS FOR REVIEW. Rev. Proc. 2007-44 IRS UPDATES REMEDIAL AMENDMENT PERIODS FOR QUALIFIED PLANS. Rev. Proc. 2007-6 EMPLOYEE PLAN DETERMINATION LETTER PROCEDURES REVISED. Rev. Proc. 2006-27 IRS UPDATES COMPREHENSIVE EMPLOYEE PLAN CORRECTION GUIDANCE. Rev. Proc. 2006-6 EMPLOYEE PLAN DETERMINATION LETTER PROCEDURES REVISED. Rev. Proc. 2005-66 IRS ESTABLISHES REMEDIAL AMENDMENT PERIODS FOR QUALIFIED PLANS. Rev. Proc. 2005-16 IRS ISSUES GUIDANCE FOR PREAPPROVED PLANS. Rev. Proc. 2005-6 EMPLOYEE PLAN DETERMINATION LETTER PROCEDURES REVISED. Rev. Proc. 2004-25 IRS EXTENDS REMEDIAL AMENDMENT PERIOD FOR PLANS. Rev. Proc. 2004-6 EMPLOYEE PLAN DETERMINATION LETTER PROCEDURES REVISED. Rev. Proc. 2003-72 IRS EXTENDS DEADLINES FOR AMENDING QUALIFIED RETIREMENT PLANS. Rev. Proc. 2003-44 IRS ISSUES UPDATED COMPREHENSIVE EMPLOYEE PLAN CORRECTION GUIDANCE. Rev. Proc. 2003-6 EMPLOYEE PLAN DETERMINATION LETTER PROCEDURES REVISED. Rev. Proc. 2002-73 IRS EXTENDS DEADLINES FOR AMENDING QUALIFIED RETIREMENT PLANS. Rev. Proc. 2002-47 IRS ISSUES UPDATED COMPREHENSIVE EMPLOYEE PLAN CORRECTION GUIDANCE. Rev. Proc. 2002-35 STREAMLINED PROCEDURE AVOIDS DISQUALIFICATION FOR PLANS NOT AMENDED FOR GUST. Rev. Proc. 2002-29 IRS RELEASES MODEL PLAN AMENDMENTS FOR COMPLYING WITH MRD REGS. Rev. Proc. 2002-21 IRS PROVIDES RELIEF FROM DISQUALIFICATION FOR PEO PLANS. Rev. Proc. 2002-6 EMPLOYEE PLAN DETERMINATION LETTER PROCEDURES REVISED. Rev. Proc. 2001-55 GUST REMEDIAL AMENDMENT PERIOD EXTENDED. Rev. Proc. 2001-17 IRS ISSUES UPDATED COMPREHENSIVE EMPLOYEE PLAN CORRECTION GUIDANCE. Rev. Proc. 2001-6 EMPLOYEE PLAN DETERMINATION LETTER PROCEDURES REVISED. Rev. Proc. 2000-27 IRS OPENS DETERMINATION LETTER PROCESS FOR INDIVIDUALLY DESIGNED PENSION PLANS. Rev. Proc. 2000-20 IRS RELEASES UNIFIED MASTER AND PROTOTYPE QUALIFIED PLAN PROGRAM. Rev. Proc. 99-23 IRS EXTENDS REMEDIAL AMENDMENT PERIOD FOR PLAN AMENDMENTS.]

SOLVE-FOR: The ALT+C macro is used to solve-for a number (e.g, $45,000 allocation (on cell C-17), $200,000 employer contribution (on cell E-4)). The base and (if integrated) excess contribution percentages are automatically changed to find the desired result. The integration level remains as entered. Generally, only this macro is needed to design a plan. FIND BEST INTEGRATION LEVEL: To find the best integration level, follow with ALT+E. This macro changes the integration level, base percentage, and excess contribution percentage, to find the lowest employer contribution to achieve the desired result (the cell the macro is played on). If the integration level is fixed or set at the TWB, do not use this macro. Only use this macro if you intend to design an effective plan or plan documents permit the integration level to be changed; a plan amendment is required. This macro may take several minutes to complete (up to 70 million calculations are compared). If the program is minimized, a single beep will be heard when the macro is finished. The macro can also be played in steps (follow the prompts). TUTORIAL: A tutorial is provided in the instructions (the functions of all macros are explained). Call me if you need assistance or have questions. I can be reached at 317-254-0385 during business hours. -- Gary

The two year period of participation starts when the first contribution under the PLAN is made into a participant's SIMPLE-IRA. [iRC 72(t)(6)] The trustee/custodian may report the amount distributed as being within the two year period (unless it knows the date of thefirst contribution). In such case, the participant may have to explain this to the IRS at some point. As long as the SIMPLE-IRA plan remains dormant (no cotributions), there is no violation of the exclusive plan rule.

Yes. Generally, non-owner contributions are allocated in proportion to pre-plan earned income (the default). If the partner's contribution expense sharing agreement specifies otherwise (e.g., 50%, 50% and 0%) do the following: (A) In the Contribution to Non-Owners column (column AH) enter the percentages in the owner rows (17-19 in this case) as decimal. [.50, .50, .0] (B) Change the response in cell AI-15 from "2" (automatic default) to "1" (user defined). That's all, proceed with design of plan Note. The percentages must equal 100%. A "?" will appear next to the 0% owner. This can be ignored. This also happens when an ineligible owner is entered (with $0 earned income) and can be ignored. Hope this helps.

Code Section 408(e), as amended by P.L. 109-280 applies to distributions after 2007. As ameded, the restrictions you mentned will no longer apply to distributions (after 2007). It can be done-- Hope this helps.

File Updated on November 12, 2008. Note: In this version, the year in which the plan year begins and ends must be entered. For more information or a tutorial, please call me (317) 254-0385, during regular business hours The attached file contains the full retail version of QP-SEP Illustrator Software and More! After installing the program, retrieve (with ALT+G) the "Unusual" client file in KEO-SAR (see icons after installation) for a comprehensive example (EI and W-2 income, outsie gains/losses, guaranteed partner, ineligible owner, and so on) or just design your own plan - SEP, SARSEP, MP, or PS. See the COR-SAR program for corporate plan types. The calculator/solver is driven by the macro ALT+C. If you also need to find the best integration level after using ALT+C, follow with ALT+E. (a) E.g., you have already solved for a contribution that gave a particular owner a $35,000 contribution with ALT+C. Now use ALT+E to find the best integration level. 50 million calculations are performed and may take a few minutes. Follow the prompts. (b) E.g., you have made a contribution of $100,000 (shown in cell E-4) by changing the base percentage or by using the ALT+C macro. Now use ALT+E (on cell E-4) to find the best integration level. SEE TUTORIAL IN INSTRUCTIONS (Start / GSL QPSEP / QP-SEP Instructions) GSL Galactic Consulting Software Installation (For all Microsoft Windows®-based operating systems, including “Vista”) Install to hard drive. Run (open or execute) GSL-QPSEP to install QP-SEP (Cor-Sar and Keo-Sar) programs. Accept all defaults. Program will install two icons on your desktop. Click on the desktop icon to launch desired program. Your screen may go blank for a few seconds while program loads (this is normal). Once Title screen loads, press any key to exit Title screen and enter input screen. Press [Alt]+Q at any time thereafter to Exit program. Repeat the process to install SIMPLE Illustrator (GSL-SIMPLE). A third icon will be created. QP-SEP Illustrator™ Designed to be used for: Designing retirement plans and allocating contributions under SEPs, SARSEPs, profit sharing, and money purchase pension plans for corporations, partnerships, and self-employed individuals. Key features: Automatically calculates net earned income, self-employment tax, integration spreads, actual deferral percentage (ADP), top-heaviness, and limitations on contributions and their deductibility. Ineligible owner and guaranteed payment partner situations can also be handled. Other factors, such as outside W-2 income and self-employment gains and losses, are also taken into account (if entered). Top-heaviness is based on document type entered, e.g., model or prototype. Client illustrations can be printed, saved, and recalled. Starting the program: To operate program or to view the instructions after installation, click the Start button, select Programs, open (click on) the GSL-QPSEP and click (open) the icon for the program you wish to run (COR-SAR for corporations, or KEO-SAR for unincorporated entities) or to view or print the instructions and other information charts. The program can also be started directly by clicking the yellow and red "COR-SAR" or "KEO-SAR" icon on your desktop. SIMPLE Illustrator® Designed to be used for: Calculating, allocating, and illustrating contributions under SIMPLE IRA and 401(k) SIMPLE plans. Key features: Maximum contributions -- salary reduction, matching, and nonelective -- are automatically determined, applied, and illustrated on two or more pages. Each illustration contains either two or three side-by-side comparisons from which an employer can choose. Deductible limits and limitations on annual additions under Internal Revenue Code Sections 404, 408, and 415 are automatically taken into account when applicable. Salary reduction amounts can be maximized for each employee, be entered as a dollar amount, or as a percentage of each participant's compensation. Beyond entering the data, there isn't really much else to do. The program is highly functional in doing pretty much everything that has to be done. In the case of a partnership or sole-proprietorship, the nonowner contribution expense is automatically allocated to the owners, but may also be manually entered (provided the percentages total 100 percent). Starting the program: To operate program or to view the instructions after installation, click the Start button, select Programs, open (click on) the GSL-SIMPLE and click on the icon for the program you wish to run ("SIMPLE Illustrator") or to view or print the instructions and other information charts. The program can also be started directly by clicking the yellow and red "SIMPLE" icon on your desktop. If you mention "BenefitsLink" you will be treated as an existing user for update purposes. Call Gary Lesser of GSL Galactic Consulting at (317) 254-0385 for user support, renewals and telephone tutorial. E-mail: qpsep@aol.com Internet: http://www.GaryLesser.com. ACCEPT ALL DEFAULTS WHEN INSTALLING. THE PROGRAM CAN BE EASILY UNINSTALLED. GSL_QPSEP.ZIP GSL_SIMP.ZIP

A transfer of a participant’s SIMPLE IRA balance is deemed to be made without cost or penalty if no liquidation, transaction, redemption, or termination fee or any commission, load (front-end or back-end), or surrender charge or similar fee or charge is imposed with respect to the balance being transferred. A transfer will not fail to be made without cost or penalty merely because contributions that a participant has elected to have transferred without cost or penalty are required to be invested in one specified investment option until transferred, even though a variety of investment options are available with respect to contributions that participants have not elected to transfer. If an amount is transferred to a DFI arrangement, the without cost or penalty provisions in the DFI arrangement, would apply to the amount transferred from the first SIMPLE-IRA. See Notice 98-4, Q&A J-4 (1998-2 IRB 26) and examples therein Hope this helps.

The controlled group rules are mathematical; there is no way around those rules if they apply. If the owner is over 59-1/2, the contribution can be made and later withdrawn without penalty. As previously pointed out, the SEP rules require that all eligible employees be covered (but rates may differ, see below). The document likely defines the employer as including all other employers that are controlled, related, or affiliated and provides for allocation based in proportion to compensation. In regard to a PLR, you might wish to see PLR 88224019 (see below), regarding a rate per hour SEP. Compare to Prop. Treas. Reg. Section 1.408-8© regarding uniform allocation requirements. Proposed 1.408-8©(1) provides, in part, that a rate of contribution which decreases as compensation increases shall be considered uniform.

Carolinawind, You might wish to add some facts. What is the nature of each of the 5 businesses? What do they do and for whom? So far, employers 2 and 3 should share one SIMPLE-IRA plan document. I edited your question to add "(assume A, B, C, D, and E)" You might also want to add that none of the owners are related.

The HSA Answer Book, 3rd Edition, has been released. LINK: HSA Answer Book - Information Authors: Christine Keller, Esq.; Gary Lesser, Esq.; William "Bill" Sweetnam, Jr., Esq., and Susan Diehl Aspen Publishers Order Desk: 800-638-8437

Excellent point.

Of course you should purchase the new 2007 hardcover edition of the 457 Answer Book. :-) Several new authors have made contributions (see below). As supplements are issued (generally for next two years), they will refer to and update the 5th edition. This year we welcome new authors L. Joan Albrecht, Mary Beth Braitman, Alex M. Brucker, Michael Cotter, Linda Russano Morra, and Terry A.M. Mumford. The 5th edition also includes two new chapters. In new chapter 15, Michael Cotter explains how retirement plan sponsors can correct operational and/or document failures to avoid loss of tax-qualified status under the EPCRS program as it applies to an eligible plan intended to satisfy the requirements of Code Section 457. In new chapter 16, Mary Beth Braitman and Terry A.M. Mumford bring together all of the issues that would concern a retirement system or board, or an individual or company, that administers an eligible or ineligible plan under Code Section 457. Highlights of the Fifth Edition (released 2007) 457 Answer Book, Fifth Edition brings the practitioner up to date on legislative and regulatory developments and changes, including the following: • How the Pension Protection Act of 2006 (PPA) effects 457 plan participants: • Nonspouse beneficiary rollovers to inherited IRAs from eligible governmental 457 plans. • New rules that allow certain direct rollovers from an eligible governmental 457 plan to a Roth IRA. • When a direct rollover from an eligible governmental 457 plan is subject to the $100,000 adjusted gross income limitation. • When a participant can purchase permissive service credits that they would not otherwise be entitled to under a governmental 457 plan. • Whether a participant has suffered a financial hardship when medical events occur involving the participant’s spouse or dependents. • How an eligible governmental 457 plans can meet the required minimum distribution (RMD) rules. • Whether an individual that received a distribution prior to 1997 is precluded form participating in an eligible deferred compensation plan. • How the Economic Growth and Tax Relief Reconciliation Act (EGTRA) changes that were made permanent under the PPA effect the coordination of the maximum deferral amount, early distributions pursuant to a qualified domestic relations order (QDRO), and rollovers. • Which deferred compensation plans are not affected by Internal Revenue Code Section 409A? • How the re-employment, service credit, and make-up contribution rules work with respect to a period of military service under USERRA. • The tax-law change that allows deferrals from post-severance pay. • Why many local government employers’ plans cannot invest in a stablevalue fund. • When a directed trustee has a duty to disobey directions. • Whether a plan administrator needs to use a lawyer licensed in a particular state when the plan administrator needs advice or an opinion on that state’s law in order to resolve a claim, or find whether a domestic relations order should be recognized. • The most common mistakes people make with beneficiary designations. • The tax treatment of a distribution paid under a domestic-relations order that is recognized under the plan, but might not be recognized as a qualified order under federal law because the marriage or relationship dissolved was between same-sex spouses. • How the bankruptcy rules under BAPA apply to an eligible 457 plan and why they don’t apply to an ineligible 457 plan. 6/07 Preface The 457 Answer Book covers all aspects of eligible and ineligible 457 plans, including the dramatic changes made by the final regulations to Code Section 457, the Pension Protection Act of 2006 (PPA), the American Job Creation Act of 2004 (the JOBS Act), and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPA). The final regulations reflect the changes made to Code Section 457 by the Tax Reform Act of 1986 (TRA ’86), the Small Business Job Protection Act of 1996 (SBJPA), the Taxpayer Relief Act of 1997 (TRA ’97), the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the Job Creation and Worker Assistance Act of 2002 (JCWAA), and other legislation. The final regulations under Code Section 457 made numerous technical changes and some clarifications to the rules regarding excess deferrals; self correction for excess deferrals to eligible plans of tax-exempt employers; reporting distributions of excess deferrals; aggregation rules for plan eligibility purposes; the deferral of sick, vacation, and back pay; unforeseeable emergency distributions; plan terminations; plan-to-plan transfers; rollovers; the ordering of partial distribution from plans containing rolled-over assets; and the effect of deemed IRAs on plan qualification. The JOBS Act substantially affects ineligible deferred compensation plan rules and deferred compensation planning (see chapter 11). The BAPA extended protection in bankruptcy for most retirement funds governed by Code under Code Section 457 (see chapter 9). 457 Answer Book, Fifth Edition is written by a team of practicing experts, preeminent in their fields, who take subscribers step-by-step through the life cycle of a 457 plan. You will learn how to: • Recognize which plans and which types of employers are subject to Code Section 457. Grandfathered plans, severance pay plans, and other coverage exceptions are also discussed. • Apply eligibility requirements, contribution and deferral limits, and when to make unforeseeable emergency withdrawals and distributions. • Design a plan so that it remains an eligible plan even if an excess contribution is made. • Recognize whether investment education is investment advice and how to use trust law principles to shift some of the fiduciary responsibility to participants. • Determine what happens when 457(b) plans are merged, assets are transferred, or employees with plans are acquired. • Determine the effects of a 457(b) plan termination and when and how participants are taxed. • Apply the rules that govern the timing, taxation, and rate of distribution applicable to an eligible 457 plan, as well as minimum distribution requirements, and in-service and unforeseeable emergency withdrawals. • Understand what a trust’s fiduciary income is and how it is adjusted and allocated. • How to comply with the automatic rollover rules for plans that provide for mandatory distributions. • Recognize securities and insurance law issues and why being subject to ERISA is a potential problem. Nearly all of the chapters have been updated by their authors to address recent 457 guidance and related issues. In Chapter 11 on ineligible plans, David Pratt expands his coverage of the major changes that resulted from the American Jobs Creation Act of 2004 on ineligible plans under Code Section 409A. In chapter 14 on Miscellaneous Issues (which is actually on the “odd and unusual”), Carol Calhoun expands her coverage of plan choice alternatives and adds a section on military reemployment, service credit, and make-up contribution rights under USERRA. 457 Answer Book includes several appendixes to aid 457 plan practitioners, a number of which have been updated or are new. Among the key documents provided are the following: • Extracts of pertinent sections of the Internal Revenue Code • The final 457 Treasury Regulations • Private letter rulings • A model state statute and a specimen top-hat statement • A model 457(f) plan for a church hospital • Indexed employee benefit limits Gary S. Lesser David W. Powell Peter J. Gulia

The model amendment contained a revocation clause; effective as of the first day of the calendar year following the date the revocation was adopted. [see Rev. Proc 97-9, containing model amendment] What are the plan's provisions regarding amenedment and termination? The "effective date" provision is also consistant with the termination of a SIMPLE-IRA plan under the SEP-LRMs. Hope this helps.

AK, it would appear that rollovers and transfers from designated Roth accounts are treated differently than rollovers and transfers of non-DRA accounts. The unintended consequenes of the PPA changes to generally allow direct rollovers from qualified plan accounts, will require a technical correction for DRAs not to be subject to the $100,000 AGI limit. It should be noted that the original DRA rules were enacted as part of EGTRA in 2001. See IRC 402A. Until the changes were made by the PPA to Code Section 408A for direct rollovers, the statute addresed rollovers from "individual retirement plan other than a Roth IRA."

The Deloitte article would appear to be misleading; as the consequences were unintended. That being said, the unintended consequences of Code Sections 408A©(3)(B) and 408A(d)(3)(B), as amended by PPA (P.L. 109-280) needs to be addressed by adding "or designated Roth account" after "other than a Roth IRA" in both of those Code Sections. Amounts transferred from DRAs to a Roth IRA are not conversions to which the $100,000 MAGI conversion limits should apply. See Treas. Reg. 1.408A-10, Q&A-2, which states: Code Section 408A9c)(3)(B) Note. The last cross reference is incorrect, it should read "408A©(3)." From Treasury Regulations 1.402A-1, Q&A-5 From 408A©(3)(B)--(Emphesis added.) From 408A(d)(3)(A)-(B)--

The facts have changed. The employer received 3/4% in even years and 15% in odd years. The one employee always received 8%. Arguably, this is no longer egregios. What are your thoughts (is self-correction possible)? Belgarath, I like your idea of submitting as non-egregios and have the IRS say it is.

Agreed. The EPCRS application may very well have many failures to mention. If an EPCRS application were filed and no notices were given, I would suggest mentioning the failures (as required), but request a waiver of the notification failure penalties because of the correction and the steps taken to prevent future failures. It's worth a try.

Absolutely. I posted a separate query on the issue of egregious (with different facts).

A business owner and one other employee paticipated in nonintegrated SEP. The owner consistantly received a 10% contribution for the last 8 years and the employee received 7%. In addition, the owner's 2 children were eligible for at least some of the years, and it is not know whether they received contributions, and if so, at what rate. What do you think: is the failure to allocate in accordance with the plan's provisions an egregious failure under Revenue Procedure 2006-27? Assume children received (a) $0, (b) 7%, and © 10% in years that they were eligible. From Rev. Proc 2006-27