Appleby

tigbenefits, I hope this does not dissuade you from posting more questions. You know what they say about dumb questions… By the way, if you are new to the business, plan to stay in it and want to do well, you may want to consider the courses offered by ASPPA and NIPA. Most of these courses will help you to understand from the fundamental to the fairly complex aspects of retirement plans. But even then, you may still find yourself asking what may seem a like a simple question to others. Sometimes the brain is so packed with the complex stuff that one can’t seem to remember the seemingly simple. QDROphile reminds me of when I first started in the retirement plans arena. I was a grunt then and know absolutely nothing. The senior (and supposedly expert) person who was supposed to provide support was always critical when the new hires asked questions- to the point where I would have a mini nervous breakdown every time I had to ask her a question. But that forced me to become independent in that arena. Suffice it to say, everyone in the firm, including this senior person, now comes to me for the answers. I have her to thank for that. If she had been too supportive, I may have become too depended on her and quite possibly would not have challenged myself to learn as much. Good luck.

Congrats Dave. Benefitslink is a staple resource for me and many others I like the idea of the filter, although I would not use it because I want to see everything. But for those who do not ( want to see everything) , it would help to exclude what they may see as clutter

Moe. It has to be written. See the requirements explained under G-1…also, one of the primary requirements of the SIMPLE arrangement is that it as written, this includes any required notification to eligible employees.

Locust, I am moving this post to the SEP board, to increase the chances of a response being posted. By the way, are we talking 2004 or another tax year? The additional contribution to employees who did not receive contributions method must generally be completed by the employer's tax filing deadline, including extensions. If the issue relates to a year before 2004, that may not even be an option.

AFAIK Butler, you're right ...

Plus, even with enough comp to get the $42,000/25% limit- if he is at least age 50 by the end of the year, he can add catch-up of $4,000 under the k-plan

The exclusion of the amount is tied in to the age 70 ½ rule- not RMD amounts attributed to inherited IRAs- IRC § 408A©(3)©(i)

See discussion at http://benefitslink.com/boards/index.php?showtopic=23098&hl

…to actually set up a Roth IRA, you would contact your financial institution, bank, credit union, brokerage firm etc. and tell them you want to establish a Roth IRA. They will (should) provide you with a Roth IRA kit, which includes an explanation of the Roth IRA rules from a general regulatory perspective, and rules specific to the financial institution, such as fees, investment options etc... and the Roth IRA adoption agreement. The Roth IRA is established when you sign the Roth IRA adoption agreement and it is accepted by your financial institution, which uses it as the basis for opening your Roth IRA account. In addition to the Roth IRA documents you may need to complete a new account application. Some firms have this built-in to the Roth IRA application/adoption agreement.

pax, What if the plan is not subject to the ACP/ADP testing- such as a SIMPLE IRA/401(k) or safe-harbor 401(k)...any recommedations for another starting point?

I am adding this link, as the topic seems to be along the same vein http://benefitslink.com/boards/index.php?showtopic=29472&hl=

No. Your regular contributions may be withdrawn at any time, tax and penalty free. Because the Roth IRA distributions rules determine that any distribution is attributed first to your regular contributions, your distribution of $1,500 or less will be attributed to your regular contributions. See the article Tax Treatment Of Roth IRA Distributions . Of course, you may already know that if you have regular savings, it may be better to use the $1,500 from those amounts, since assets in a Roth IRA accrue on a tax-deferred basis and are tax-free if qualified...which is not the case for your regular savings

Jilliandiz---Call Merril again. This time, ask to speak with someone in the retirement plans department- preferably a supervisor or manager . I am sure they offer a SEP and have their own document. Any service is always ‘any service, however, short” for SEP IRAs. No modification allowed. If an employee worked I hour, he has performed one year of service. But as Bird indicated, he could be excluded based on the compensation, if compensation is less than $450. As you may know, each SEP participant must complete an IRA adoption agreement to establish a traditional IRA to which their SEP contributions are deposited. It is this IRA adoption agreement that defines permissible investments and any restrictions/limitations

No Name- next time- get the online version of the book and the CD …In chapter 5- Derrin also talks about ‘shared employees’ , who are individuals who work for more than one employer’s who share an office …I will take a look at that later and see how it relates

Moe, The notification requirements are explained in IRS Notice 98-4, available at http://www.irs.gov/pub/irs-drop/not98-4.pdf. It appears that the employer failed to provide the Notice to employees for all the years. If the failure is attributed to a reasonable cause, the penalty would be waived. I cannot find any specific cite that address whether the failure would prevent the employer from receiving a match. However, I think the issue would be whether the owner’s salary deferrals and matching ( or non-elective) contributions are even eligible for all the years the plan was maintained. There is no indication of the point at which the $50 per day penalty would apply- however, I think you would agree that the only notification that would be of any use to the employees at this stage is the notice for the 2005 year. In my opinion, we are looking at EPCRS- possibly all the employer’s contributions to the plan before proper notification is provided to the employees being treated as excess contributions . To be sure, I would rather defer to Gary Lesser on this one. He will be back in a few days.

Gary, I may be misunderstanding the rules, but I though the answer would be no-for 2005...because the plan year ended in calendar year 2005. Your thoughts?

Moe, By “walked through” , do you mean that the employer walked through and handed each employee the Notification to Eligible Employees. If I remember correctly, failure to provide this notice results in a penalty of $50 per day until the notice is provided. I am not sure if a verbal meets the notification requirement … I will check on the other question and get back to you later.

It is doesn’t pass the smell test… It appears that under Code Section § 408(p)(2)(A)(ii), the salary deferral election includes amounts received from bonuses. This would mean technically, that the rank and file, who elected to make salary deferral contributions, did elect to defer from their bonuses. The question then becomes, whether the payroll processor did include their bonus in the salary for the month the bonus was received for salary deferral purposes- i.e. if the deferral was a percentage of compensation I am not sure how a salary deferral contribution would be treated when no deferral election was made…let see if someone else can respond to that issue

Piggy-backing on NO Name’s question…by tax entity, do you mean that they all formed a corporation? Partnership etc? and if so, isn’t there some concern about whether this attorney can establish the SEP for himself instead of the tax-entity establishing the SEP? Under the latter, mustn’t all employees of the tax entity must be allowed to participate in the SEP? ...am I missing something ?

The SIMPLE 401(k) rules are a little different. Under the SIMPLE IRA rules, the SIMPLE must be the only plan maintained by the employer (unless the other plan is for unionized employees). Under the SIMPLE 401(k) rules, the employer may maintain another plan, providing the employees under the other plan are not eligible to participate in the SIMPLE 401(k) plan. Therefore, it is possible that this would not be an issue in the first year, if service with a predecessor employer is allowed to be disregarded for eligibility purposes. The two year grace period that applies to a SIMPLE 401(k) plan appears to apply only in cases where the business fails to meet the definition of “eligible employer”. An eligible employer is defined as follows: In my opinion, you have until the end of 2005 to terminate the other plan, unless the employees who receive benefits under that plan are not eligible to participate in the SIMPLE 401(k)

Maybe age 59 ½ is not even an issue- --let’s assume that it’s not. Since the spouse beneficiary can treat the SIMPLE IRA inherited from her deceased spouse as ‘her own’, the questions then becomes, is an individual allowed to consolidate two SIMPLE IRAs? As discussed earlier in this thread, SIMPLE to SIMPLE rollovers and transfers are permissible at any time. The rules that restrict the rollover or transfer of assets from another retirement plan to a SIMPLE IRA, and permit the rollover/transfer of SIMPLE IRA assets to another SIMPLE IRA, does not place any restriction on the source of the SIMPLE IRA assets that can be rolled/transferred to another SIMPLE IRA. For instance, it does not say that a SIMPLE IRA that has not met the two-year rule cannot be rolled/transferred to a SIMPLE IRA that has met the two-year rule. In my opinion, it seems permissible then for the spouse to transfer her decedent husband’s SIMPLE IRA( which now becomes her ‘own’ SIMPLE IRA) into her existing SIMPLE IRA. Regarding the question of rolling/transferring the inherited SIMPLE IRA assets to a Traditional IRA, that would seem the safer option- as there is no doubt that is permissible- providing the decedent’s SIMPLE IRA satisfies the two-year rule.

Thanks sarnold

The IRS has issued a draft version of the 2005 form 8606. Still no mention of accounting for rollover of after-tax assets from QP. d8606.pdf

No. But I have seen 403(b)(7) masquerading as 403(b)(9)…True story...If you say I said that, I will deny it

Form 5330 to report a reversion?