Appleby

Brilliant!

What is their reason? If you are not their employee, they should pay your business- whether that business is a sole proprietorship, corporation etc. You complete the W-9 and they pay based on the information provided on the W-9. Tell them you are registered with the IRS as an S-Corp, and therefore payment for work should be made to the S-Corp (unless your tax advisor says otherwise. Check with you tax advisor as this is a tax issue. ).

I can see how that could be seen as the right option- it is practical. However, the RMD for the year of death must be distributed/paid to the beneficiary and included in the income of the beneficiary, if it was not already taken by the decedent. It would still be calculated as if the account owner lived through to the end of the year. @Lou S.'s response above is 💯% correct.

Something must have gotten lost in translation, because it is common procedure to establish beneficiary IRAs for estates. If I said anything that gave that impression, my apologies for the confusion. A beneficiary IRA can be established for an estate , and is usually the standard procedure when an estate is the beneficiary. It cannot be a nonInherited/beneficiary IRA. But it can be a beneficiary/inherited IRA The standard procedure is to establish a beneficiary IRA for the estate and transfer the assets to that beneficiary IRA- but, see quote below from one of my earlier responses. You are right that it could not be rolled over if distributed. You do not want to use the term rollover when communicating with the custodian ( the unintended will likely happen if you do. Always say 'transfer' ) This is because a distribution to a beneficiary other than a spouse beneficiary cannot be rolled over. They would push for a transfer to the child's beneficiary IRA. Summary IRA owner died and wife inherited IRA Wife did not transfer inherited IRA to her own Wife died. Custodian says because wife did not transfer to her own IRA and name a beneficiary, the beneficiary is the estate of wife. The standard procedure at this point is to transfer the assets to a beneficiary/inherited IRA for the estate. This means that 1099-Rs would be issued under the TIN of the estate. But, for various reasons, some taxpayers do not want distributions to be reported to the estate. They instead want distributions to be reported to the beneficiary of the estate. Some custodians will accommodate that , by transferring the assets to a beneficiary/inherited IRA for the beneficiary of the estate ( in this case the child), and 1099-Rs would then be issued to the child. Does this help? Please feel free to call me - 973-313-9877

That is correct. but, the financial institution is saying that , since she did not name a beneficiary, it defaults to her estate. if that is truly the default provision, then- technically, the estate was designated as the beneficiary. No. The 10-year rule would apply to the successor beneficiary. She was an eligible designated beneficiary- and therefore eligible to take distributions over her life expectancy. When she died, her beneficiaries ( successor beneficiaries ) gets switched to the 10-year rule . We should. But, it comes down to the custodian's operational requirement. Some custodians do not allow the assets to pass-through to the beneficiaries of the estate at all. Those that do follow one of two paths: Transfer from the decedent's IRA to a beneficiary IRA for the estate, then transfer from that beneficiary IRA to a beneficiary IRA for the child( beneficiary of the estate). Or Transfer from the decedent's IRA to a beneficiary IRA for the child( beneficiary of the estate) Either is purely operational- and either works as long as the desired end result is achieved

Peter is right- it is a document issue. When he died, the IRA became hers. She died without naming a beneficiary, which means that her beneficiary is determined under the default provisions of the IRA Agreement/Plan document. That would be true if the estate is the default beneficiary, under the terms of the IRA plan document . It is best to check it, to be sure. Some do default to spouse, and if not, then the children and so on until it gets to the estate. If the estate is the beneficiary, the inherited IRA would be established for the estate. Some PLRs/some custodians will allow the beneficiaries of the estate to transfer the inherited IRAs to their beneficiary IRAs in these cases. The question would then becomes: if the estate is the beneficiary, are the children the (only) beneficiaries of the estate? Because all of the beneficiaries of the estate would benefit. I think you are right about the 10-year rule. §401(a)(9)(H)(iii). I found no exception for a spouse beneficiary who did not move the inherited IRA to their own- I will continue to look.

Your understanding is correct. The only thing I would change is the use of the term 'alternate payee', as that applies to QDROs ( not transfer due to divorce , for IRAs) Edit to add: The 10% penalty would not apply if the recipient spouse qualifies for an exception that applies to IRAs.

It is likely that the terms of the agreement does not require them to take action, other than resigning if they know that the plan has not been amended. I am assuming that this is a prototype, because of the "soloK reference". I wish I could provide helpful responses. But, engaging an ERISA attorney is the only solution I come up with. Good luck

Notice 2020-62 . Do a control F and word search $200 https://www.irs.gov/pub/irs-drop/n-20-62.pdf

Regarding the exception for providing the 402(f) notice, it appears to apply to amounts less than $200. § 1.402(f)-1 , Q&A 1 says " Q-1: What are the requirements for a written explanation under section 402(f)? A-1: (a) General rule. Under section 402(f), as amended by UCA, the plan administrator of a qualified plan is required, within a reasonable period of time before making an eligible rollover distribution, to provide the distributee with the written explanation described in section 402(f) (section 402(f) notice)." Since a plan is not required to allow a direct rollover of $200 or less, that would be the exception. What do you think?

A SIMPLE IRA cannot be terminated mid-year https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-simple-ira-plans Likely, the 401(k) contributions will need to be corrected, as they are not permitted to be made when the employer maintains a SIMPLE IRA. The administrator for the 401(k) should be notified so that they can take corrective actions.

Yes, yes- fi true. This would be quite interesting. The IRS generally use their document matching system for distributions- and if the 1099-R does not match the 1040 and Form 8915-E, it will likely generate a CP2000 notice. This is where the argument could be made by the client's CPA. But, it is risky as there is no way to know how they will respond. Another question that comes to mind- not necessarily for this case, but in general. When something like this happens for an amount intended to be a CRD, does the paying agent check back with the plan to make sure that the distribution is still approved? Because, being OK to distribute in 2020 by 12/30 as a CRD does not necessarily mean OK to treat as a 2021 distribution- since CRDs could be distributed without requiring a triggering event. And, did they perform withholding? There is no mandatory W/H for CRDs, but a 2021 distribution would be subject to W/H is eligible to be rolled over. @Christine Roberts- questions like these could be helpful for your case, or it could produce the opposite result- which is, if the distribution should not have been made because there was no triggering event, will the plan need to reclaim the funds?.

This might come down to where the funds actually were on December 30 ( PS- this is the actual cut off date for CRDs. This might be crucial when making the case). Were the funds in an account considered plan assets at end of business on December 30th? @MoJo- there was one particular instance where the IRS said no. The key phrase was "actually distributed during the calendar year" . ( A firm contacted the IRS on behalf of their client, anonymously. Participants had submitted RMD requests by December 31 that were not processed due to year-end volume).

Can you make a catch-up if your don't exceed the regular salary deferral limit ( whether the $19,500 or limit set by the plan if less) ? That is the question. I think the answer is no, but I recommend double checking §1.414(v)-1 to be sure. You could make the salary deferral plus catch-up to the 401(k) and the $38,500 employer contribution to the SEP IRA ( if the is sufficient compensation to allow $38,500). But, as @CuseFansaid, you would need a prototype SEP agreement. You might be able to get access to one at no cost , or about $75 per year. Google prototype SEP IRA agreement.

A Form 5305-SEP ( IRS model agreement) cannot be maintained along with another employer plan. But, a prototype SEP could , if not prohibited under the document. If no contributions are made under a Form 5305-SEP, that does not prohibit the employer from adopting another plan that year.

Question: Was this approved by the plan trustee? A common compliance issue with brokerage firms is failing to get proper authorization for plan distributions. If not, they might need to be reminded that the trustee is required to approve distributions, so that this does not re-occur.

Yes,definitely as a 60-day rollover. It does not appear that a CRD would be processed as a direct rollover .

Yes. But there might be another issue: Does not the plan allow for Coronavirus related distributions (CRD)s. If yes, and she is a qualified individual, then the $100,000 can be rolled over within 3 years of receipt. If the plan does not allow for CRDs and she was eligible to make the withdrawal, it can still be treated as a CRD if she is an qualified individual . CRDs are capped at $100,000 per person. ( I see from your update that the amount is over that. Assuming she is eligible, only $100,000 of the amount is eligible to be treated as a CRD.

His spouse is subject to the 10-year rule. She cannot take it as her own, because she is not the spouse of the original owner. Under the SECURE Act, she is subject to the 10-year rule .

What do you mean by "get the amounts"? Did they inherit the account this year? or, are they rolling over the amount this year? The answer to Q2 and Q3 depends on the answer to that question. You also need to know the sister's ages , so as to determine the options available to them. And, depending on their ages and when the owner died, you might need to know is separating occurred timely - allowing them to use their individual life expectancies . You might want to consult with an advisor who is an expert in this area. Mistakes can be costly.

I forgot to add- if you run into a roadblock, I recommend Penchecks https://www.penchecks.com/our-solutions/trust-resolution/uncashed-checks-qta-service/ . Ask for Chip Davis and/or Steve Wagoner.

You did not state your relationship to the plan. This might help (FAQs About The Abandoned Plan Program - DOL). https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/abandoned-plan-program.pdf Also https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/abandoned-individual-account-plan It is possible that the financial institution holding assets for an abandoned plan will refuse to serve as QTA. That would be a nightmare scenario, as getting the DOL involved might not help, and it would then be necessary to have a court assign trusteeship to a party. Good luck

I don't recall if the IRS requires a letter of acceptance. But, another regulatory body might-like the SEC. There are certain requirements in place for trasnfers, such as the delivering custodian being required to either honor or deny a transfer request within a certain time frame; and, if the request is denied, an explanation must be provided. Part of this requirement is that a transfer must occur between permissible accounts. Both custodians ensure that this requirement is met, by stating/confirming the type of accounts involved in the transfer; providing the assurance needed that the transaction is non-reportable . The letter of acceptabcle serves that purpose.

Right. Assuming the individual filed his/her tax return by the due date, the deadline for correcting the ineligible rollover is October 15, 2020. Meeting this deadline means that the 6% excise tax is avoided. Any net income attributable (NIA) must be included. Some custodians will calculate the NIA. if this IRA custodian won't, the instructions in IRS Pub 590 can be used - Page 32 of the 2019 version https://www.irs.gov/pub/irs-pdf/p590a.pdf 1099-R should show return of excess as nontaxable. Earnings would be taxable in 2019- indicated by a Code P in box 7.

I think the idea is that a sole proprietor has two businesses. Example a Burger franchise and a car-wash. Agree with Bird's response