Appleby

No. The RMD for the IRA must be taken from the IRA and the RMD for the DB plan must be taken from the plan. See IRS Pubs 590 and 575 at www.irs.gov

Yes. The amount is subject to income tax. But, withholding is optional. Unless the participant elects to have taxes withheld, the payor does not withhold. Notice 2008-30

Marital property State too… Community property states are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Puerto Rico, Texas, Washington and Wisconsin , The marital property state is Wisconsin

These may help : Pub 515 http://www.irs.gov/pub/irs-pdf/p515.pdf 1042-s instructions http://www.irs.gov/pub/irs-pdf/i1042s.pdf 1042-s Form http://www.irs.gov/pub/irs-pdf/f1042s.pdf ITIN http://www.irs.gov/individuals/article/0,,id=96287,00.html

For non-resident aliens, you file Form 1042-S. Not Form 1099-R. NRAs can apply for an ITIN If my memory serves me right.. the treaty rate does not apply if the beneficiary does not provide a TIN, which means that the withholding would be 30% instead of the 0% that applies to Mexico.

Good suggestion. I agree with Bird about waiting until the end of the year. Who knows, you may receive more income, resulting in the SEP contribution not being an excess. An excess nondeductible SEP contribution results in traditional IRA contribution. That is automatic for tax purposes. You would need to notify your IRA custodian, in writing, of the excess SEP amount and include a reminder that they should flip/recharacterize the $2,000 from a SEP contribution to an IRA contribution. You can leave it in your IRA as a contribution or remove it as a ‘return of excess’ along with any earnings/losses. Talk to your SEP IRA custodian. They may have a prototype document you can use. If they do, completing the prototype document, and indicating that it represents an amendment of your plan as of 01/01/08 should suffice. Ask them about their procedure for making the change. No. See above.But technically, since your business is unincorporated ( I think- right?), you can simply request the return of excess IRA contribution and send the amount to your Solo-k as a salary deferral. Technically, it is still moving from one to the other, but the actual process is important.

The fix…  Keep the SEP for this year. The contribution to the SEP will take place of the profit sharing contribution to the Solo-k. This may be overly simplified but…The solo-k has two funding buckets (1) salary deferral contributions and (2) employer contributions , which is treated as profit sharing contributions. For someone who has a SEP and the Solo-K at the same time, the employer contribution can be made to the SEP or to the Solo-k as an employer contribution. The tax results would be the same for either.  Make the salary deferral contribution to the Solo-k  If the SEP is a 5305-SEP, amend it to a prototype SEP. This is necessary, as an employer may not maintain a 5305-SEP for any year that the employer also maintains a qualified plan.  If you no longer want to keep the SEP, rollover the amount to the Solo-k. This can be done at anytime.

It is still optional. The IRS assumed that new regs would change it to mandatory, because of language in proposed amendment to PPA 06. When the amendment was passed, the ‘mandatory ‘ feature was dropped. So we are back to square one.

See this post 457 contribution limit

I could be wrong, but I thought the partner could not be treated as a common-law employee for compensation/plan purposes, and only earned income under 401©(2) counts. Do you think it makes sense to post the question (of whether a partner could receive both K-1 income and W-2 wages)? Maybe retirement plans in general?

See http://www.retirementdictionary.com/earlyd...tyexception.htm, which includes links to Pubs 590 and 575

...and if his Schedule C allows him to contribute $5,900 to the SEP, then it means he has at least that amount in (taxable)n income from the business. Therefore, he may contribute $5,000 as a traditional IRA contribution. The $5,000 can come from any legitimate source. Here’s another way to look at it…you work for company X and earn $10,000 in taxable compensation. You elect to defer $9,000 to the company’s SIMPLE IRA, which leaves you with $1,000 less any applicable taxes. You take $5,000 from you regular checking account to make your $5,000 IRA contribution. This is OK, as the IRA contribution must be based on your wages reflected in Box-1 op your W-2, but need not come from your paycheck.

Your understanding is correct. The amount withheld for taxes is not considered part of the conversion. Instead, it is treated as a regular distribution, subject to any applicable income tax and early distribution penalty. When recharacterizing the conversion, be sure to include any NIA. If the entire balance in the Roth IRA is from the conversion +- earnings/losses, then recharacterizing the entire account balance will suffice.

W-8BEN? It also needed for purposes of confirming that the individual is eligible for the treaty treatment Form and Instructions

The assets are valued at the closing price, for the day the assets leaves the account. If it’s done on a Saturday, Sunday or another day when the market is closed, it is valued as of the close of the next day when the market is opened.

Welcome to Benefitslink BenMngr08 . Definitely the best place to get answers on benefits/retirement related questions. Be sure to sign up for the newsletter here http://benefitslink.com/newsletter/ , if you have not already done so.

It is a good question. The solution ( of recontributing the amount as an IRA contribution by the tax filing deadline) could work if the entire balance was distributed from the IRA. This is because a distribution of the entire balance meets the requirement to be treated as a return-of-excess-contribution. Since a return of excess technically zeroes out the contribution bucket for tax purposes, contributing an additional amount for the year is permissible. If the same IRA is used, the challenge is to get the custodian to allow the contribution, especially if their system blocks the contribution bucket from exceeding the limit for the year…since, as JEVD explained, the contribution is still reported on IRS form 5498 for the year even if it is removed. Example: Roth IRA balance includes contribution of $4,000 made for 2007. Entire Roth IRA balance , including earnings, was distributed December 2007 . The entire balance can be rolled over within 60-days. If the 60-day deadline is missed, $4,000 can be contributed as a regular contribution for 2007. The 5498 will show a total contribution of $8,000 for 2007, which means the taxpayer will need to explain to the IRS that $4,000 was removed as a return-of-excess.

Withholding is optional. If withholding is elected, the minimum amount of federal withholding is 10%

…so, in sum… Based on the ordering rules, distributions from your Roth IRA ( or Roth IRAs as if you have more than one , they would be treated as one IRA for this purpose) will first be attributed to your regular contributions, then conversion amounts-if any-, then earnings. So, if you have made regular contributions of $15,000 or more to your Roth IRA/s, and you have never taken a distribution from your Roth IRA/s, the $15,000 will be tax and penalty-free. If you have taken distributions from your Roth IRA before, then those amounts would be counted as part of the contributions that have already been distributed. You can rollover the $15,000, or a portion of it, within 60-days. The 60-day period starts the day after you receive the distribution.

When you remove the excess amount, it should be accompanied by any NIA to the excess. The NIA can be earnings or losses, and is based on the performance of the entire IRA balance during the computation period. Any asset/s in the IRA can be removed as the distribution, to satisfy the return-of-excess distribution. If noncash is distributed, consider that the value of the asset may change between the time the request is submitted and the time it is actually processed, resulting in the reported distribution amount being more or less than the amount that should be distributed.

…and if the IRA includes after-tax amounts, don’t forget that those amounts must be left in the IRA as they cannot be rolled to the 401(k) plan.

Bear in mind too that Solo-401(k)s are usually not designed to permit matching contributions- only salary deferral and profit sharing . If that is the case , then it may not be an issue

Full year’s compensation This post may help http://benefitslink.com/boards/index.php?s...ic=31395&hl

Well, it’s still early in the year... They might change it..or not. If they do, I hope it’s done early for the benefit of custodians who may want to complete programming to track these amounts . It may make sense for custodians to use a separate source code (specs) for these transactions, so that they can be redirected if necessary.

L337, I agree with JEVD as well. Regarding your second paragraph, isn’t the transaction a taxable conversion? See IRS Notice 2008-8 Q&A 1 , which says Also, see the instructions for the 2008 1099-R for ‘Qualified rollover contributions as defined in section 408A(e)’ at http://www.irs.gov/pub/irs-pdf/i1099r.pdf , page 4. On the distribution side, the IRS is saying it is a conversion which by definition is taxable, while on the contribution side, they are saying it is a rollover. It would seem logical that the amount is reported in Box 3, since it is really a conversion.