Appleby

Bear in mind that the employer should notify the employees of the intent to terminate SARSEP. The IRS recommends notifying the financial institution as well (I don’t understand why)…it appears there are no other termination requirements. The employer may also check the plan document regarding any termination procedures.

I agree with Gary. To establish the SIMPLE IRA plan, the employer must complete form 5304-SIMPLE or Form 5305-SIMPLE(subject to the designated financial institution rules). Each employee must complete a SIMPLE IRA adoption agreement which could be a 5305-s, used with banks etc or 5305-SA, used with brokerage firms…therefore, for the employees, the type for SIMPLE form completed depends on the type of financial institution with which the employee’s SIMPLE IRA is established. For the employers, the choice of form may also be determined by the financial institution with which the employer chooses to establish the SIMPLE IRA Plan. For instance, some financial institutions offers the Form 5305-SIMPLE (For Use With a Designated Financial Institution). An employer that uses the Form 5305-SIMPLE to establish the plan, places certain restriction on the SIMPLE Participants, which is all participant in the plan must establish their SIMPLE IRA with the institution that the employer established the SIMPLE IRA plan. However, the employer must provide notification to the employees to the effect that they may transfer their SIMPLE IRA balances within a reasonable period, to another financial services institution without incurring any penalty. This means that a participant in a 5305-SIMPLE, who wants to maintain his/her SIMPLE IRA at a financial institution, other than the institution that the employer chooses to establish the SIMPLE IRA plan must maintain two SIMPLE IRAs – at least during the two year period…after the two year period, the assets may be transferred to a traditional IRA. If the employer uses the Form 5304-SIMPLE, employees may establish their SIMPLE IRAs with any financial institution( that offers SIMPLE IRAs). The employer must then send contributions to the financial institutions were the individual SIMPLE IRAs are established. Some financial institutions may used a SIMPLE prototype form instead of the IRS model 5305 or 5304… Generally, financial institutions require employees to complete the financial institution’s SIMPLE IRA adoption agreement and provide with it a copy of the employer’s Form 5305 or 5304 SIMPLE.

219© (1) addresses the ability of one spouse to make a spousal IRA contribution for the other spouse. 219© provides that the spouse making the spousal IRA contribution must have sufficient compensation. 219©(2) goes on to clarify that in order for the one spouse to make a spousal IRA contribution for the other spouse, This shows that a joint return must be filed in order for one spouse to make a spousal IRA contribution on behalf of the other spouse.Code Section 408A provides that Code Section 408A©(2) provides that ….here, it is clear that the intention is to include 219(c ) in the application to Roth IRAs.1.408 states The last sentence is merely clarifying that if you are married and file separately, then it is not the $0 and $10,000 that applies to you…instead the 95,000 and $110,000 applies to you…because for this purpose, you may treat yourself as not married…If you are not married, you are treated as not having a spouse. It follows then that if you do not have a spouse, you cannot make a spousal IRA contribution, as a spousal IRA contribution can only be made by a married individual who files a joint return. See also Q-4 of 1.408A-3. I have written to the IRS requesting that they review the language in Publication 590.

The change of custodian can be done as a distribution and rollover or as a trustee-to-trustee transfer. The preferred method is a trustee-to-trustee transfer. For a distribution and rollover, the assets are made payable to you and you are responsible for delivering the assets to your new IRA custodian for deposit to your IRA within 60-days after receiving assets…This option is not available for some mutual funds as they may not be available in certificate from---which means you may have to liquidate the funds into cash. A Rollover is reported to the IRS as a distribution (Form 1099-R) and a rollover contribution ( Form 5498). The transaction is non-taxable. In a trustee-to-trustee transfer, the assets are delivered directly between the two custodians... to effect the transfer, you would establish your new Roth IRA with your new custodian and complete an account transfer request form (Automated Customer Account Transfer (ACAT) form). Your new custodian will submit a request to your old custodian for the assets. The transfer will not be reported to the IRS. Check with your current custodian regarding any termination/redemption fees

See IRS Publication 575- page 11 at http://www.irs.gov/pub/irs-pdf/p571.pdf. Note that the option to defer RMD on the pre-1987 balance may be available only if the 403(b) provider separately accounts for the pre-1987 balance.

Absolutely. The only income restriction is that your modified adjusted gross income (MAGI) should not exceed $100,000; otherwise you would no be eligible. Additionally, if your tax filing status is married filing separately, you are not eligible. The movement from your traditional IRA to your Roth IRA is done as a Roth conversion, which is a reportable and generally taxable transaction

You’re right Jim---the income MAGI would be $95,100 to be eligible for a contribution of $2,820. leclark clarified that the $180 mentioned relates to an excess contribution tax--- not an excess contribution amount. leclark—I assume this means that the software is in effect stating that the amount you are indicating for your spouse is an excess contribution, which is subject to a 6% penalty ($3,000 x 6%= $180)* if the excess is not removed from the Roth IRA by tax filing deadline , including extensions ( or until October 15 if the tax return is filed by tax filing date). This supports the explanation above, which is, if you are ‘married filing separately’, you are not eligible to make a ‘spousal IRA contribution’… *The penalty applies for each year the excess remains in the IRA… You may also refer to treas reg 1.408A-3 Q&A 3 regarding -- a married individual who has lived apart from his or her spouse for the entire taxable year ….this states that such an individual is treated as not married Regarding the statement in Pub 590…In instances where an IRS publication , such as publication 590 contradicts the Code or treasury regularly, the Code or treasury regulation is the overriding authority .

I agree with mbozek… In instances where a non-person is a primary beneficiary...an individual who is one of multiple beneficiaries, where one of the beneficiaries is a charity or other non-person, may be well served to encourage the non-person to distribute their portion on the inherited assets by September 30 of the year following the year the retirement account owner dies. This will allow the remaining (individual/s) beneficiaries to use the life expectancy method to calculate post-death distributions

Must be your access port. I use the Panel Publishers Deluxe from work, home, when I am on the road and even in my local library--- so far, I have never experienced any problems. Anyway, I hope your selection meet your needs.

There is no minimum or maximum age requirement for establishing and contributing to a Roth IRA. Some financial institutions may have age restrictions in place- for some, this translates into not allowing individuals under a certain age to establish an IRA...for others, it means the individual’s (the minor's) guardian must establish the IRA on behalf of the minor- this incudes signing the documents used to established the IRA and selecting/directing investments.

A SIMPLE must be established between January 1 and October 1…an exceptions applies for a business that came into existence after October 1. In this case, the SIMPLE must be established as soon as administratively feasible. I mention this because you indicated the effective date of the SIMPLE as 12/31/03. Assets representing SIMPLE IRA salary deferral contributions must be contributed to the individual SIMPLE IRAs by the 30th of the month that follows the month to which the deferral applies. It appears the date on the check is immaterial- providing it is contributed by the deadline and that it is not postdated, which may prevent it from being honored by the bank… The contribution should be reported (on form 5498) for the year it is received by the financial institution.

Regarding the software calculation---For an individual who is filing as single with a MAGI of $109,100, the contribution limit is $2,820. Contributing $3,000 would result in an excess of $180….

Hi clark IRS Publication 590 appears to require some rewording. According to IRC 219(c ) , the couple must file a joint return in order for one spouse to make a ‘spousal IRA contribution’ on behalf of the other spouse… For a married couple filing jointly, the phase-out is $150,000 - $160,000. This means that if your MAGI is less than $150,000, and you file as ‘married filing jointly’, then you and your spouse may each contribute the maximum amount. If you file as ‘married filing separately’, the phase-out range is $-0- to $10,000. However, if you did not live with your spouse at anytime during the year, for the purpose of IRA contributions you are treated as single. Which means your phase -out limit would be $95,000 - $110,000---and it also means that you may not contribute for your spouse-techincally...As your spouse should be filing his/her own return

If your modified adjusted gross income exceeds the limit for the year you contribute to your Roth IRA, you may recharacterize the contribution to your traditional IRA. A recharacterization for a 2003 contribution may be completed by October 15,2004. If you choose to recharacterize the contribution, talk to your IRA custodian about documentation requirement and applicable procedures. If you prefer not to contribute to a traditional IRA, you must remove the contribution as a ‘return of excess’ from the Roth IRA in order to avoild penalties. The deadline for removing an excess contribution for 2003 is also October 15,2004.

Wouldn’t it be more appropriate to contact the son and ask him to return the excess amount to the plan? If the amount was rolled to an IRA, the IRA Custodian may be able to return the amount only after receiving written instructions from the son…

If the SIMPLE IRA is terminated in mid-year and a 401(k) plans is established for the same year, the SIMPLE IRA contributions for that year would be disqualified (for lack of a better term)…remember…a SIMPLE cannot be maintained for any year that the employer maintains another plan for the employees covered under the SIMPLE… See http://benefitslink.com/boards/index.php?showtopic=22651 for information you may find helpful…

Establishing the 401(k) plan is not required. If the SIMPLE Plan is terminated, the SIMPLE IRA assets would just remain in each participant’s SIMPLE IRA until the individual owner is ready to make withdrawals or transfer/rollover the SIMPLE assets to an eligible retirement plan. Further, since these participants are no longer employees of the Corporation, their assets cannot be rolled to a 401(k) established by the Corporation. An individual that has assets in a SIMPLE IRA may either: -Keep the assets in the SIMPLE IRA until RMD amounts must be taken - transfer the SIMPLE assets to another SIMPLE IRA, -After 2-years transfer the assets to a traditional IRA, convert the assets to a Roth IRA or rollover to a qualified plan in which the individual is a participant. See http://benefitslink.com/boards/index.php?a...minate+a+simple for a discussion on terminating SIMPLE IRAs Hope this helps- if not, please post follow-up questions

Yes. Providing you meet the eligibility requirements, i.e., your MAGI is not over $100,000 and your tax filing status is not married filing separately You mentioned using the recalculation method – technically, there is no other option for you as the IRA owner. As the IRA owner, you compute your RMD amount using the uniform life expectancy table, unless your spouse is your sole primary beneficiary and is more than 10-years your junior, in which case you could use either the uniform table or the joint life expectancy table. The uniform table will produce results of a larger RMD amount than the joint tables

You may want to check with the fund to determine if early redemption fees would apply. Excluding early redemption fees, set up fees and the like, no penalty would apply for a trustee-to-trustee non-reportable transfer. .

That requirement no longer applies as a result on the repeal of the 1.0 rule under Section 415(e) Notice 99-44 ;Pub.L. 104-188

I agree --- an individual is subject to the 402(g) limit of $13,000 for 2004( $16,000 if at least age 50 by year-end) regardless of the number of plans in which the individual participates. If the individual is employed by two unrelated employers, the 415 limit is determined separately…which means the individual could receive $41,000 in each plan; i.e. $82,000 for both plans...compensation allowing.

Examples of IRS responses to requests for waiver of the 60-day limit on rollovers. PLR 200401025 PLR 200401024 PLR 200401023

Yes. It applies only to a rollover. There is no limitation on the number of times a non-reportable transfer may occur during any period.

See--- IRS publication 590 IRC 408(d)(3)(A) Lemishow v Commissioner, 110 TC 346 (1998)

BenefitsLink Retirement Plans Newsletter 12/31/03 related IRS Notice http://benefitslink.com/IRS/notice2004-8.pdf