Borsley

Even online banks? I would assume most online banks have an electronic solution for forms and signatures so they shouldn't be any different.

I should add, that I do believe according to IRS Notice 98-4 that the answer is "yes" as to SIMPLE plans. I'm having trouble however, verifying the answer as to SEPs.

Can anyone advise on the application of the SEC Pay-to-Play rule (Rule 204(4)-5) to SIMPLES and SEPS? I have been told that it is possible for a government entity, as defined in the Rule, to adopt a SIMPLE or SEP. Anyone agree that this is correct?

Finally! The IRS releases the expected corresponding information via Revenue Ruling 2010-48. http://www.irs.gov/pub/irs-drop/rp-10-48.pdf

Situation. Client elects to do a rollover out of his 401(k) plan into an IRA. After the transaction has been completed (and the money is in the IRA), it is determined that the rollover should never have been allowed. The funds are being requested back from the IRA custodian. Question What consequences are there to the client on any earnings (or losses) that occured while the money was in the IRA (and before it was sent back to the 401k plan)? If the rollover wasn't valid in the first place, it seems to me the same amount should be redeposited back into the 401k plan as came out. ie....if the rollover is invalid, doesn't seem proper the client should be able to benefit from any postive investment experience that occured in the IRA. Similarily, but on the other end of things, what if they took a loss and the gross rollover amount is not still available to move back to the 401K plan?

I'm not sure how helpful my response will be, but here are my thoughts. I believe the answer may revolve around whether or not excluding one group from one of the plans allows said plan to still pass 410(b) Coverage testing. Plan sponsors are allowed to exclude covering certain groups of employees from their qualified retirement plans as long as they can still pass Coverage Testing. That said, there are some exclusions that are not generally allowed (e.g.…excluding an employee class that is identified as "part-time employees"). There may be an additional consideration since the excluded class of employees will still benefit from another type of plan. Average Benefit's Test? I may be wrong on the test name, but I seem to recall from my days working with qualified plans that there was a test to determine if employees were being properly covered given different benefits offered to them. Bottom-line: I would say there is a possibility this is allowed, but you're going to need to work with an experienced benefit's attorney or consultant to determine the possibilities of going this route.

I was surprised to find new LRM's for Traditional, Roth, and SIMPLE IRA's on the IRS website. They are effective June 2010. http://www.irs.gov/retirement/article/0,,id=97182,00.html (scroll towards bottom of the page). Although these were long rumored (and it is assumed new model IRA plan documents will follow), I haven't read or heard anything about these being released. I'm curious if anyone has seen or heard of the LRM's being released from either IRS notifications/newsletters or any industry-type groups? I like to monitor these developments and want to be sure I'm tapped into the best resources for these types of things going forward. Thanks!

But the existing contributions were made with after-tax dollars, not income deferrals. Does that make a difference? But they were not made as Roth(k) contributions so there would need to be a means to convert to Roth(k) money (which there currently is not).

I just went to the IRS site at www.irs.gov and searched for 1035-SEP. See the instructions for "When not to use the 1035-SEP" (found under "Instruction for Employer). http://www.irs.gov/pub/irs-pdf/f5305sep.pdf

Yes, this is a bit of a tangent (as I readily acknowledged in my first sentence of my last comment). My point wasn't to question the "lesser of two evils" (extra 8606 vs. 1040X). I tend to agree with that conclusion. I was simply (and probably could have done a better job asking) about this statement that you provided that appears to be a statement of fact (not opinion). It is my understanding that this is not true (and I provided the basis of that understanding) , but am always open to new information. I realize things change, but I also realize there has been a past incorrect perception by the public that amendments increase the chance of audit. I've never seen or heard anything (backed up with evidence) that suggests this to be true. NOTE: All amended filings must be filed via paper. This has been the case since the advent of amended filings. There is no electronic option for these (and I don't believe there ever has been one). Thus, the fact that initial filings are filed electronically (and the numbers keep increasing), doesn't change the fact that amended filing come in each year on paper. There may be some validity (although, again, I've never seen or heard evidence of this) that a paper filed INITIAL filings might stand out (given the increase in e-filing on "initials" ) but I think that is pure speculation at this point especially considering the millions of paper filing that still exist today.

I don't want to get this discussion too far off-track, but can you substantiate this claim that amended 1040's increase the chance for IRS audit? I worked for 3 or 4 years in the tax preparation industry and this was definitely not the understanding we had or communicated to clients. That was 6 or 7 years ago, so maybe something has changed. Also, I do believe the "tax hints" in TurboTax maintain and communicate a similar understanding. That is, there is no increased risk for audit by filing an amended return. I know for a fact, the IRS has gone on record saying this creates no increased scrutiny. I believe this is a common misunderstanding (and can be hurtful to a taxpayer that may have good reason to file amended, but doesn't due to an unwarranted concern). If there is truly a credible source that can confirm the increased audit chance, I'd be very interested in seeing/reading it. Thank you,

I'll also add a comment with the important caveat that this is not my area of expertise. From my understanding, a person is not required to use the 529 plan of the their state of residence. I believe you can choose whatever state's plan looks most attractive to you. I suggest you do an internet search of the best state 529 plans so you can properly educate yourself. Don't feel you're locked into North Carolina's plan. When I did the search, Kiplinger's has some specific recommendation for North Carolina: http://www.kiplinger.com/features/archives...-529-plans.html Again, I believe you have flexibility on which state's plan you use. There is a lot of info on the internet on this topic. Good luck!

That's part of what is driving my question. Does the financial institution or TPA assisting with the 401(k) plan have some requirement/reporting responsibilities related the distribution of pretax money out of the 401(k) that will essentially be a conversion to a Roth IRA (i.e.…now after-tax money) and thus report it accordingly? If so, how would they know? Are the now required to ask the individual if the rollover is to another pre-tax vehicle or instead, a Roth IRA? ….and also, what is the reporting on the front-end by the entity who is handling the Roth IRA? I'm just trying to get comfortable with the paper trail here.

To help me understand this process, can anyone tell me the paper trail (i.e.…tax reporting) that occurs when an individual rolls over pretax 401(kl) monies to a Roth IRA? In other words, what is the paper trail that shows these funds converting from pre-tax to after-tax money? How is the fact that this money is converting from pretax to aftertax via a direct rollover to a ROTH IRA reflected on both the 1099R and the 5498? Is there other tax documents that would be produced as part of this paper trail?

A beneficiary of an inherited IRA has been receiving a stream of payments for a couple years. Now the bene is wondering about annuitizing the remaining IRA balance. Any reason this couldn't be done or other thoughts/considerations?

I'm sure someone will more fully answer your question, but I can tell you that you shouldn’t' suffer any double-taxation. That is, you already paid taxes on $11,000 of your Roth contributions (i.e.…this is your cost basis) snice you contribute to a Roth with after-tax dollars. You have no gain, so there is nothing left of your account that you didn't already pay taxes on once.

Still not true in Wisconsin. http://www.dor.state.wi.us/taxpro/news/091030.html I was on an ACLI conference call today (unrelated matter). They mentioned the Wisconsin situation with Roth conversation but there was also mention that Wisconsin may not be the only state that hasn't adopted conforming law. Does anyone have any insight into other states that may fall into this category?

Simple answer - "no". Roth(k), if I'm not mistaken, doesn't have income restrictions, same max annual contribution limitation, and there is also a difference in when the 5 year window opens/closes for each (i.e...they each stand on their own per individual if said individual has opened both types). Isn't there also a small difference in alllowable distributions and when they receive tax-free treatment?

From my understanding, that last required update to SEP plan documents was required by EGTRRA. Can someone confirm? More -- I previously worked with 401K plans and given their popularity, it was always easy to stay atop of legislative/regulatory developments and new requirements since information filtered down from so many sources. I'm new to the SEP world and would be interested in hearing ideas/thoughts from individuals on what resources they rely on to stay current on any SEP related developments. I would also me interested in any favorite resources(e.g...books, online resources, etc) you count on or any suggested training that might be available. I'm new to SIMPLE IRAs, so same question would apply. I am happy I found this forum as I can see this being valuable as well.