Borsley

The usual situation required when the sponsor of a retirement plan has to correct their mistake, is to make affected individuals "whole". That would include vesting schedules. The rub here though is the 25% penalty isn't a vesting schedule setup in the plan, it is an IRA excess tax for early withdrawal and it is based on when the funds were actually deposited in the IRA. Maybe someone will have a different take, but my advice would be to talk to a CPA or tax professional and see what they can tell you about options, if any, to get out of the 25% excess tax.

IRS issued Q&A guidance today: https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-recharacterization-of-roth-rollovers-and-conversions

PenServ which publishes an IRA newsletter came out yesterday and indicated that they'd been informed by "an official IRS source" that 2017 conversions can be recharacterized until October 15, 2018. This only applies to conversion made during 2017 and will not extend to conversions done on or after January 1, 2018.

This is unfortunate, but errors happen even within the best companies. This is just my opinion (and based on some anecdotal experience), but I believe this why confirming transactions when you receive confirmation statements and/or quarterly statements is so important. I believe this will be the firm's stance/protection against having to reimburse you for expenses. Often times these documents even state that you must notify the company within X time period (e.g....90 days) if the statements don't reflect your intentions. As to notifying regulators, I believe the most they'll do (if anything) is to verify that you as the client were given confirmation/statements that should have allowed you to see this error and notify them to correct on a timely basis.

I don't believe a distribution should ever be made to a person that is known to be deceased. If it was, can you return the check indicating the IRA owner is deceased and then work through the process the custodian requires for the beneficiary to take a distribution, rollover, or setup inherited IRA? If person is deceased, assume the check isn't cashed?

Related: where do you find information on when the IRS requires individually designed SEP plans to be updated for new laws and regulations? The previous comment mentioned the need to update in 2002 for EGTRRA. If I'm not mistaken, there was a later requirement to update to changes related to PPA. I could be wrong about that. Bottom-line - is there a one-stop source that would list out the updates and when they were required?

In Bobrow vs Commissioner, the Tax Court ruled against the taxpayer that was using a "bridge" strategy (i.e...using IRA funds for other circumstances) even though the strategy was found in IRS Pub 590 at the time. I think if you asked Mr and Mrs Bobrow this question, their wallets would answer the question for you as to how wise following such a strategy would be even if you don't think you can find letter-of-the-law reference that disallows it.

Allow me a moment to editorialize. It is because individuals continue to try and manipulate the intent of tax-favor laws, that the rest of us have to deal with the expense associated with dealing with pages and pages of regulations. While many of us are out here fighting and trying to make arguments for fewer burdensome and costly regulations, examples like this remind us why regulators continued to feel empowered to do more.

I read recently that some believe that passage of a PERMANENT QCD deduction in 2014 is still a possibility. Speculation that this might be only thing passed by the lame duck congress. Stay tuned...

Only congress, not the IRS, has the authority to extend the Qualified Charitable Distribution exemption.

I would just add - if you are looking for tax advice for your specific situation (which is what this is) , you're best to consult a tax or legal advisor rather than the annuity account provider. In my experience going to the provider you're going to get one of two things. 1) an answer provided by a call center employee who's appraisal goals include providing "first call" resolution to questions as quickly and efficiently as possible (and who will not be there to assist you if you're audited), OR, 2) a response from the annuity provider essentially telling you that they can not provide tax or legal advice so you'll need to consult with your tax advisor for your particular situation.

I thought this as a requirement now for all financial institutions: http://www.amstock.com/shareholder/Cost_Basis_Reporting_2013.pdf

I think it is always wise for the sponsor of the SIMPLE IRA plan to at least due a cursory consultation with their tax or legal advisor....especially in an instance like the one being discussed where the financial advisor is far from an expert in this area. Yes these are "simple", but there are still considerations regarding the plan operation and tax considerations. For example, a SIMPLE IRA plan can incur operational defects (e.g...excess contributions) that should be addressed through the IRS EPCRs program. The problem I normally see with SIMPLE plans is that no one with any real expertise is involved UNTIL something gets missed or goes wrong. You can expect only limited (or no) assistance from the fund company as they are only be used for their investment products. They are not being paid to administer or consult when potential issues arise. This can be a real source of frustration for the plan sponsor when no one advises them proactively that neither the financial advisor or the fund company have the expertise to handle 100% of the aspects of their retirement plan. Having the proper professionals (plural) advising on the front end will hopefully avoid any issues down the road or at the very least, have established this relationship so this is in place should something come up. Good luck.

Have there been any required changes to SEP Plan Documents since that the last required updates were needed per EGTRRA?

Not addressing question but as an aside , it seems like you might have some potential copyright issues cut/pasting to this extent. Unless you've received premission from the source (and properly credited it), IMO you should remove all but a few of the opening sentences and then link to the source for the remaining part of the text.