Appleby

I'm letting Vanguard do the work of transferring the money from Oppenheimer (I beleive this is trustee-to-trustee?) Yes. If you complete Vanguard's ACAT/Transfer form, and have them request the assets via a transfer, then the transaction is a trustee-to-trustee transfer, which is non-reportable and nontaxable.

You should move the funds as a trustee-to-trustee transfer, and not as a rollover. Less room for errors, and you can complete transfers as many times as you like. Rollovers are limited to one per 12-months per involved IRA. See http://www.retirementdictionary.com/2-year...-SIMPLE-IRA.htm

A Roth Annuity would be more likley to include an irrevocable beneficiary designation ---maybe check with an annuity provider?...unless she prefers a more diversifed form of investment portfolio

No. This is unlike qualified plans and 403(b)s where the assets are required to be distributed when terminated. Under a SIMPLE IRA, the assets can remain in the participant’s account after termination.

He made a point of emphasizing that the RAP will not replace the deadline; but who knows...

Nice job on the summary John. Thanks

After seeing GBurns; post, I think mine is unecessary and not as well said...hence the edit

I am not saying that what your approach does not make commonsense, because it does. But commonsense and the regulations/requirements don’t’ always require the same approach. The requirements are that amounts rolled over to an IRA must be corrected as a return of excess, if the amount is ineligible to be rolled over. Reducing the amount reported on the 5498 as a rollover by the ineligible-rollover amount and not reporting the returned of overpayment on a 1099-R does not satisfy the IRS tax reporting requirements. See PLR 8952011, Rev. Proc. 2008-50 on correcting overpayments to IRAs, IRS Pub 590 on correcting excess IRA contributions-including amounts due to ineligible rollover as a result of incorrect information received from the plan, and the instructions for filing 5498/1099-R. DBS1, I know that many financial institutions handle the transaction the way you did/do. But I assure you that that is improper procedure.

Step by step instructions are in Pub 560 at irs.gov

But it’s not a matter of doing what we thing is easier for the IRA owner. It is a matter of complying with the IRS reporting requirements. If your IRA department gets audited, then it would be found to be out of compliance with the tax reporting requirements for an IRA. For that matter, if an IRA owner makes an excess IRA contribution ( or even an IRA contribution that is not an excess) and wants to have it returned to him/her, why not just wipe the books clean of reporting and just return the amount to the IRA owner ? In the same vein, if an IRA owner takes a distribution and rolls over the amount in 60-days and says…’oops, I should not have taken that distribution after-all and would rather not report it on my taxes’, why not kill the tax reporting? Why not? Because as an IRA custodian you are required to perform tax reporting in accordance with the tax code and IRS instructions.

Yes. As long as the amount is rollover eligible

I would say yes. Most of these firms have the ability to add 'trailers' to their transactions, such as 'deposited as of 00/00/00'. Since the employer did provide the instructions before the deadline and they dropped the ball, then they need to do what they can to ensure the transaction is recorded properly.

You would be surprised ( or maybe not) of the amount of custodians that pocess 'reclaims' against IRAs without the IRA owner's permission

Because any movement of assets from qualified plan to an IRA is a rollover (whether direct or indirect). Because it is ‘too much money’ the excess amount then becomes an ineligible rollover, and an ineligible rollover must be corrected as a ‘return of excess’ distribution.

But it doesn’t matter. Whether it is a 60-day indirect rollover or a direct rollover, the excess amount creates an ineligible rollover which must be removed as a return –of-excess +/- any NIA. See IRS Pub 590 and IRC 408(d)

That would seem like the sensible approach…however, it is an ineligible rollover to the IRA, so it must be corrected as a return-of-excess contribution and reported on Form 1099-R…according to the instructions from the IRS.

Why not make non-deductible contributions to your traditional IRA and convert in 2010 when the MAGI capped is removed? Take a peek at this article

...and since all the accounts are just part of the plan, wouldn’t it be OK to just move the contribution + earnings to the right participant’s account balance account; with instructions from the trustee?

You did not say whether the IRA owner provided written instructions to the IRA custodian…so I thought I’d mention that the custodian should not process the transaction without receiving written instructions from the IRA owner to do so... To answer your question… Your 1099-R should be for the amount the client should have received. Code 8 does not necessarily mean that the distribution is taxable. Code 8 means that any earnings on the excess would be taxable in the year that the 1099-R is issued. If the excess amount is $2,000 and only $1,600 is being returned due to losses, it means that $1,600 would be in box 1 of Form 1099-R, but zero would be in Box 2b. Since Box 2b indicates what is taxable, entering zero would mean that the client would owe no taxes on the distribution.

Thank you too... Happy Thanksgiving

Hi lip, The rule is a little different from how you word it...you cannot maintain a SIMPLE while you maintain another retirement plan...except where exceptions apply ....So, if the SIMPLE IRA is being maintained for the year, the employer cannot maintain another retirement plan. If both plans are maintained, the SIMPLE IRA contributions for the year are disqualified. If no contributions are made to the SIMPLE for the year, then the employer can maintain the other plan for the year.

90-24 remain on the books until 12/31/08. The difference between those that were completed by 09/24/07 and those that are completed between 09/25/07 -12/31/08 is the the former is grandfathered- which means no agreement is required and the latter is not grandfathered, requering an ISA. the regs intended to take away 90-24 trasnfer as of 09/25/07, but they continue to occur after that; hence the reason they were addressed in Rev proc 2007-71. See Section 8

Before that vendor may accept an exchange after 9/24/2007 or new contributions after 12/31/2008 From what I understand, 1.403(b)-3 does not address exchanges that occur 09/25/07 to 12/31/08. These are addressed under Treas. Reg. 1.403(b)-10. For transfers that occur 09/25/07 to 12/31/08, the Information sharing agreement (ISA) must be in place by 01/01/09. This does not have to be a 'formal' ISA. However, if the ISA is not in place by 01/01/09, then the account must be re-exchanged to an approved vendor by 01/01/09. The 'old' 09/24 exchanges will no longer be permitted as of 01/01/09. Instead, there is a new type of exchange. Exchanges between approved vendors is considred an exchange of investment, and an ISA is not required. As of 01/01/09, if an exchange occurs to a non-approved vendor, a formal ISA must be in place. The ISA brings this account under the plan. This would be in place at the time (of before) the exchange occurs. The point of this agreement is to deem these new accounts to be brought under the plan. As to 1.403(b)-3… (3) says in part “A contract does not satisfy paragraph (a) of this section unless it is maintained pursuant to a plan.” ...(ii) of that section discusses the assignment of responsibilities. I think this is the other agreement to exchange information to which Architect refers ( agreement on who is responsible for what administrative functions, and to provide certain informtion to stakeholders). It says in part …” A plan is permitted to assign such responsibilities to parties other than the eligible employer...and may incorporate by reference other documents, including the insurance policy or custodial account, which thereupon become part of the plan.” So it seems the account becomes part of the plan, when this agreement ‘entered upon’, which can mean the employer attaching a copy of the annuity/custodial agreement to its ‘plan agreement ’. Recall that the 403(b) document need not be a formal document, but can be a bunch of papers, annuity and custodial agreements, forms and such paper-clipped together. But, if the Vendor is not part of the plan, and a contract exchange occurs to that Vendor, then an ISA is required in order to bring that acocunt under the plan. Since this exchange will be ocurring 01/01/09, then the agreement cannot be in place by 01/01/09, but should be in place in order to permit the exchange...and unlike the exchanges that occur 09/25/07 to 12/31/08 which does not require a formal agreement, this exchange does require a formal agreement.

I found out what Mr. Architect ( Isn’t it uncanny that his name is Architect and he is the one of the drafters of the regulations? Something to be said for destiny)… Anyway…he explained in another presentation that there are two types of agreement. One, is the Information sharing agreement that must be in place for post 09/24/2007 90-24 exchanges to a non-approved vendor. This ISA governs that particular account/exchange. Treas. Reg. 1.403(b)-10. The other is an agreement to exchange information and to share responsibilities . This need not be in place by January 1, 2009. This is the agreement 1.403(b)-3. Apparently, there is confusion which leads some to believe that these are one and the same, and the confusion has lead to a misunderstanding that the 01/01/09 deadline applies to both agreements.

Thanks Janet.