Appleby

Very interesting...

I too agree with PIP We are just happy to have access to the board.

I think you both said it all….. In general, if a trust is the beneficiary, then the account is treated as not having a designated beneficiary, unless the trust is ‘qualified’. For this purpose, qualified means meeting certain requirements that allows one to ‘look through’ the trust, and use the life expectancy of the oldest beneficiary of the trust for RMD – including post death RMD- purposes( see bottom of page 47 of the Final RMD Regulations at http://www.irs.gov/pub/irs-regs/td8987.pdf for a definition and page 36 of the 2005 version of IRS Publication 590 at http://www.irs.gov/pub/irs-pdf/p590.pdf). For a non-qualified trust the RMD is calculated using the uniform table (i.e. assuming the beneficiary is ten years younger than the participant) during the participant’s lifetime. If the trust is qualified, then the life expectancy of the oldest identifiable beneficiary under the trust can be used for RMD purposes-including post death RMDs. This means that while the participant is alive, the RMD is calculated using the uniform table. An exception applies if the spouse of the participant is the sole beneficiary of the trust, and she is more than 10 years younger than the participant. In such a case, the RMD can be calculated using the joint life table. This may seem pretty straightforward. But the complex nature of a trust makes it challenging to determine whether the trust meets the requirements that would allow the use of the life expectancy of a beneficiary under the trust. For instance---assume the trust has two individuals and one charity as beneficiaries (of the trust), that could result in the life expectancy of the beneficiaries not being eligible for purposes of calculating the RMD. However, exceptions may apply if the trust includes certain provisions . Which is why I agree that it pays to get someone who is an expert in the area of trust to assist with making the correct determination. I agree that Natalie’s book -available at http://www.ataxplan.com/- is a great source of reference for trust matters.

Hi Lori, I recall researching the same question for a client- I looked high and low, and could find no such provision. Let’s see if Gary chimes in. If there any are exception/s, he would know of it/them.

Agreed… By the way, did the plan provide the custodian with an acceptance letter ( letter signed by the plan trustee, confirming that the plan would treat the amount as a rollover contribution to the plan? Was the check made payable to the plan? Most custodians will not report an amount as a direct rollover, unless they received an acceptance letter----they definitely will not if the check was not made payable to the plan/FBO the participant.

Bear in mind that for employee of the Corporation, only W-2 wages are generally considered for plan contribution purposes..

Appreciate comments from you both. Still have not had time to look for cites, but I did run a search and found this link http://benefitslink.com/boards/index.php?s...560entry85560 .... it does not appear definitive, but...

Except that Notice 98-4 is citing the earliest date that can be reasonably segregated rule, which as you know applies to all salary deferral contributions. While it is clear that this deadline applies to common-law employees/W-2 Wage earners, it appears that exceptions apply to unincorporated business owners. From what I understand, the unincorporated business owner must make the salary deferral election by the last day of the tax year, but the amount can be deposited by the unincorporated business owner’s tax filing deadline. I am looking for supporting cites and will post such.

Any thoughts on T.C. Summary Opinion 2006-58 http://www.ustaxcourt.gov/InOpHistoric/runyan.sum.WPD.pdf specifically that the deadline for the SIMPLE contribution is January 31. From everything else that I have read, the deadline for depositing the salary deferral contribution (for the unincorporated business owner) is the employer’s tax filing deadline-

So it appears you are under age 59 ½? See IRS Publication 590 for list of exceptions http://www.irs.gov/pub/irs-pdf/p590.pdf Page 41 of the 2005 version

Transfers are governed by NYSE Rule 412 The timeframe depends on whether the transfer is ACAT or non-ACAT. ACAT. See http://www.nscc.com/clearance/acats.html http://www.nasd.com/web/idcplg?IdcService=...PAGE&nodeId=489

It seems they misunderstand the rules. You should have them reverse the state tax withholding- ask to speak with a supervisor. Amount withheld for taxes can be rolled over to the Roth IRA. Ensure that the rollover is deposited as a ‘Roth Conversion’, instead of a regular rollover. If amounts withheld for taxes are not rolled over within 60-days, that amount would be treated as a regular distribution…not part of the conversion.

Yes. WDIKs explanation is still correct

The Roth conversation is excluded from the MAGI for purpose of determining for a Roth Conversion or contribution. Cite: Section 1.408A-4 , Q&A 9 of the Final Roth IRA Regulations

I agree with Bird. Also, her contributions to the SIMPLE will not affect the amount she is allowed to contribute to her SEP..which means she can contribute to maximum amount to both.

Withdrawals of amounts that you converted to your Roth IRA in 1998 will be tax and penalty free. See article at http://www.investopedia.com/articles/retir...t/03/030403.asp

namealreadyinuse is right. It does. The statement should be A rollover between Roth IRAs is virtually identical to rollovers between traditional IRAs. The only difference is that the one-year waiting period for successive rollovers does not apply to rollovers (conversions) from Traditional IRAs to Roth IRAs.

This is assuming you have no other Traditional, SEP or SIMPLE IRA right?...since if you do, the $800 would be prorated to include after-tax and pre-tax amounts, based on an aggregation of all of your SEP, SIMPLE and Traditional IRA balances….i.e. all your traditional, SEP and SIMPLE IRA balances are treated as one IRA for purposes of determining whether the $800 is completely tax-free

.also, administrative fees that are paid out of pocket, must be paid before they are charged to the IRA, as any reimbursement would be considered a contribution. If you are referring to commissions, those cannot be paid with funds from outside the IRA, as any such payments would be considered an IRA contribution

Unfortunately yes. Applying it to later year means filing IRS form 5329 and paying the 6% excise tax …6% of the $4,000 for 2004. When applying it to a later year, you need not contact the custodian, as they would not make any adjustments on their books. .

Sullivan, you can maintain a qualified plan for the year if you funded a SEP- you just need to make sure the SEP is a not a 5305-SEP, and if it is, ensure that it is amended to a prototype or individually designed SEP.

It depends on your investment objectives. John G is the expert on that-You may want to search for some on his responses to similar questions. The most I can tell you is that if you are looking to diversify your investment, you may want to establish your IRA with a brokerage firm, where you would be able to buy stocks, bonds, mutual funds etc. With mutual fund companies your investments are usually limited to mutual funds. With banks, your investments may be limited to money market, certificate-of-deposits (CDs) and other low-rick investments, unless the bank offers other investments options. Fees is another point of consideration… You may want to consult with a financial planner.

No. You will not owe any taxes on the amount that you withdraw. Exceptions apply to amounts representing earnings, unless you were at least age 59 ½ when the distribution occurred-which would make the distribution qualified ….and you would never get to the earnings until you have withdrawn the original value of your contributions and conversions (see below for example) Also, if your distribution is $10,000 or less and it was used to purchase, build or rebuild your first home, it would be tax-free as that would also be a qualified distribution Example: Conversion amount in 1997 - $40,000 Earnings accrued to date $4,000 Total balance -$44,000 Distributions in 2005 or 2006- $10,000 $10,000 would be tax-free If more than $40,000 is withdrawn, the amount in excess of $40,000 will be subject to income tax, unless the distribution is qualified. Generally, the withholding rules do not apply to Roth IRA distributions.

You can rollover your SIMPLE IRA into a 401(k) plan, providing the following two requirements are met: 1. It has been at least two years since the fist contribution was deposited to your SIMPLE account, 2. The 401(k) plan allows for rollovers from SIMPLE IRAs. The rollover cannot include amounts representing RMDs, after-tax balances (which should not exist in a SIMPLE IRA) and amounts that are generally not rollover eligible.

Some valid points were made here, and the suggestions seem only fair. But, as much as I would like to, I cannot disagree with Scottrades’ position. The taxpayer designated the contribution as a 2004 contribution. The custodian is required to report the contribution as per the taxpayer’s designation. If the taxpayer is not eligible for the contribution for the year, then it should be corrected as a return of excess or applied to a later year. One cannot place too much reliance on responses obtained through contacting the IRS customer service department. From what I hear from clients, they often provide incorrect information. The most recent, they told a client that it is OK to rollover his traditional IRA into his SIMPLE IRA…and they even sent him an E-mail confirmation. After we explained why the transfer should not occur, and showed him the relevant IRS Notice, he contacted the IRS again and as we recommended, he spoke with one of the supervisors in the Employee Plans division, who gave him the correct response. It is true that the IRS instructions allow for corrected Form 5498s to be issued, but only when the financial institution makes an error, not when the taxpayer makes an error. If the taxpayer is not eligible for the contribution for the year it was designated, the taxpayer should either correct it as a removal of excess, or apply it to a later year. Sometimes what seems right is not, especially when dealing with the rules that govern retirement plans. Ranbo, you said “most likely due to filling out the form wrong”. If you are not sure, you should check the forms. If you did not indicate ‘2004’ on the form, then the custodian is required to issue a corrected for, showing the contribution as 2005. If you did, then you (not the custodian) should take corrective actions.