Appleby

Is this a Keogh philc?? ... In PTE 93-1 and PTE 93-2- , the DOL granted exceptions to owner-only plans… to establish their plans with financial institutions in return for free or discounted banking related services--- such an arrangement would not be considered a prohibited transaction...

It depends on what we mean by positively… In PLR 200343029 the spouse was the sole beneficiary of the estate of the deceased and had sole discretion over the disposition of the assets. She was allowed to eventually roll the assets to her own IRA. In PLR 200343030 , a non-spouse beneficiary was allowed to transfer the assets to an inherited IRA titled in her name and the deceased’s name ( as is required for an inherited IRA) The issue of tax reporting was not directly addressed in either PLR…however, one can assume from the rulings what those requirements are: In 200343029 , since the spouse was allowed to treat the IRA as her own- that means that any post-death distribution will be reported under her name and TIN In 200343030- the non-spouse beneficiary was allowed to move the assets to an inherited IRA of which the title included her name. However, IMHO this was only for purposes of identifying her portion of the inherited assets. The fact that she was required to distribute the assets over the remaining life-expectancy of the deceased and not her own, shows that she was not treated as the beneficiary. If the estate had been disregarded (for lack of a better term) as it was in PLR 200343029, then she would have been allowed to distribute the assets over her life-expectancy and not the remaining life expectancy of her deceased father … I say all this to say, the post death distribution must still be reported under the TIN of the estate of the deceased. In a case such as this- it appears the PLR was not necessary, as it did not make any allowances that a fair Custodian would not make… for instance, allowing the three beneficiaries of the estate to establish separate inherited IRAs and also allow the inherited IRA to be titled in the name of the deceased and the beneficiary with one key difference to the provision of titling allowed in the PLR, the difference being the title would be along the lines of “ IRA FBO John Doe’s Estate/ b/o John Doe/Jane Doe’s share” Jane being the beneficiary of the estate…

I agree with your first question/comment Regarding the second…despite the fact that each partner deducts the SEP contributions on their respective 1040s, partners are not allowed to establish their own plan…the plan must be established by the partnership. The contribution must be allocated uniformly under a model plan.

I paraphrase, just to make sure were are of mutual understanding. In addition to the 1998 conversion, you make regular IRA contributions to the Roth IRA. Your current Roth IRA balance is less than the mount you converted plus the amount you contributed. If this is true, then your are right- all distributions from your Roth IRA will be tax and penalty-free.

If the plan was already amended to accept traditional IRA (Non-conduit) assets then it is eligible to accept SARSEP assets…Once SARSEP assets are deposited to the account, they assume the identity of traditional IRA assets, and are subject to the same rules- with the exception noted above. I mentioned ‘non-conduit’ because some plans restrict the rollover of IRA assets to those that originated from qualified plans and were not commingled with contributory IRA assets.

Yes. There is no age limit on rollover contributions.

The October 1 deadline also applies to SIMPLE 401(k) plans

I don’t think anyone is saying that. I think Sal is right and Sal’s explanation agrees with the regs. It appears that this is just one of these things that require rereading several times in order to understand it…at least for people like me

The main reasons for having two separate procedures are 1) The ACAT delivery is an automated process which a firm can access for use only if the firm is a http://www.nscc.com/directory/ NSCC settling member or a DTC member bank 2) The ACAT delivery system cannot accommodate transfers of balances unless the full balance is being transferred. I hear there are discussions about improving the system so that it can accommodate transfers of fractional balances. If this comes to fruition, only non-member firms will use the non-ACAT method Firms that are not NSCC settling members or DTC member banks, may use a manual means of delivery ( non-ACAT )…The manual mode is also used in instances where member firms are unable to use the ACAT system, such as when only a fraction of the account balance is being transferred.

Carl C, Talk to someone else at the new Custodian or have your account representative do so. There are (at least) two kinds of transfers for ACAT eligible firms- ACAT and non-ACAT transfer. An ACAT transfer can be done by some financial institutions – not all…An ACAT transfer must be a full ( total account balance) transfer. A non-ACAT transfer is done by firm that are not eligible to do ACAT transfers. Firms who are eligible to do ACAT transfers, must use the non-ACAT transfer when transferring only a portion of the account balance

I assume you are calculating for 2002 since you are using $84,900??? The maximum spread is 5.7%. You can go below 5.7 if the plan document permits… If you go below 5.7, the following limits apply $0-$16,980 Permitted disparity factor is 5.7% > $16,980 but < or = $67,920 Permitted disparity factor is 4.3% > $67,920 but < or = $84,899 Permitted disparity factor is 5.4 % $84,900 Permitted disparity factor is 5.7 % The first step in your calculation appears to be incorrect. Anyway, I think we would need to know the compensation for the other employees in order to determine if the calculation is accurate Some additional comments/reminders which you may already be aware of but may benefit others who are not -Be aware of the 25% /$40,000 limit -Can’t integrate with social security if using the 5305-SEP or 5305A-SEP form

I see …Here’s my 2-cents….there are two limits to consider here. The plan limit and the individual limit ...Yes an individual may make catch-up contributions to each plan for $2,000. In this case, the catch-up is subject to the plan limit. However, the individual limit must be considered…and regardless of the number of catch-up contributions made to each plan, the aggregate salary deferral for the individual cannot exceed $14,000 for 2003 ($12,000+ $2,000). By plan standards, the $2,000 will be classified as a ‘catch-up’, but by federal standards, the amount will not be considered catch-up unless it exceeds the 402(g) limit of $12,000

I agree with Butler

No. Only assets from an eligible retirement plan can be rolled to an IRA. The term eligible retirement plan includes plans subjected to the jurisdiction of the internal revenue code (IRC) and the US Court. A UK pension plan does not operate under the IRC

Yes it does. If you make salary deferrals to both plans, you are limited to $12,000 ( for 2003) + catch-up IRC § 402(g)(1) EGTRRA 2001 § 611(d)(1))...

To be on the safe side, SARSEP assets that are included in the nondiscrimination testing should not be removed from the SARSEP account until the test has been completed – just in case amounts need to be removed

It depends on what you mean by “set-up”. The deadline to establish the SIMPLE for 2003 was Between January 1 and October 1 2003. … However, establishing the SIMPLE means properly completing the required paperwork –… If the SIMPLE was established Between January 1 and October 1 2003, she may deliver the paperwork to you at anytime after this deadline to have you open the account to which the contributions for 2003 will be deposited, providing the account is established in time to receive a deposit of the first contribution…Remember that if salary deferral contributions are made, they must be deposited by the 30th of the month following the month to which the deferral applies…

jevd, We do not require copies of document for transferor IRAs. Once the IRA is transferred to our IRA the transferee IRA becomes subject to the provisions of our document, which incidentally allows a beneficiary to name a beneficiary and includes a default provision in the event the beneficiary fails to name a successor beneficiary. This may not be applicable here, but I will mention it anyway. Some 403(b) accounts have strict requirements that the account owner must meet in order to receive a distribution from the 403(b) account. Should the account wish to transfer the 403(b) to a successor custodian, the transferor Custodian requires confirmation that the receiving 403(b) document provision is at least as strict as theirs. If an IRA Custodian employees such strict rules as those you mention, the only way they can ensure this is enforced is to implement similar requirements. From a marketing perspective, it does not make good marketing sense to restrict the beneficiary options in that regard. As you may know, the IRA market is very competitive at this time (with the new portability rules, the mass distributions from qualified plans triggered by baby boomers reaching retirement age… and all), and one of the major (and most important to most IRA owners) selling points is ‘allowable beneficiary designations’ and beneficiary options... An IRA Custodian that employs such restrictive rules may be well served to consider amending their document provisions to allow more flexibility.

Therefore...to calculate the RMD for 2003, you use the 'year-end-balance /FMV as of 12/31/02 and the age of the individual in 2003 ( 72)

The plan that currently holds the assets prevails. I am not sure how this affects contingent beneficiaries, except that the per-stirpes designation would make the heirs of the primary beneficiary the successor beneficiary I think this could be enforced only if the original IRA owner died while the IRA was at the receiving Custodian. Since the assets were transferred to the receiving Custodian after the death of the IRA owner, the receiving Custodian would have no knowledge of the identity (or existence) of any contingent beneficiaries (unless they request this information as a condition of accepting the transfer of assets). It appears then that since no beneficiary designation is allowed, the document provisions (in the event there is no beneficiary) would apply

You are right about the segregation requirement. Once the assets have been deposited in the ‘pooled’ account, then it is considered deposited to the plan. The splits (by this I assume you mean allocating to individual accounts) and buys can continue to occur on a monthly basis. Regarding the investment of the funds- it depends. The requirement is that investment opportunities be made available on a nondiscriminatory basis (will look for the cite). If holding the assets in the ‘pooled’ account favors HCEs and not NHCEs, then it is not allowed… Most plans consult investments at a frequency that is cost-effective. For instance, it would may not be practical to invest the $6 you mentioned…

Belgarath, my concern with rolling it to an IRA is that the IRA owner would now have an IRA for which no basis was reported ( or can be determined) and , resulting in the inability to determine the taxable/non-taxable portion of distributions, possibly resulting in the payment of taxes on amounts that should be tax-free… Maybe the participant kept the statements from those missing years?

Calculation: Maximum loan amount is the lesser of A or B A = $50,000 reduced by the highest outstanding balance during the last twelve months =$50,000 - $5,855.61 = $44,144.39 B = greater of b-1 and b-2 b-1 =( vested balance x 50% ) – current outstanding balance = ($16,960.45 X 50%) - $4,776.98. = $8,480.23 - $4,776.98 =$3703.25 b-2 = $10,000 - current outstanding balance = $10,000 - $4,776.98 =$5,223.02 $5,223.02 is the greater of b-1 and b-2 $5,223.02 is also lesser than A But $5223.02 would exceed the 50% balance, and would require additional security

I agree with R. Butler She is able to borrow: $3703.25 if the plan does not allows the $10,000 limit- no additional security required or $5,223.02 if the plan allows the $10,000 limit- security required (the $10,000 limit allows the participant to borrow up to $10,000 even if the amount exceeds 50 %)

I agree- but from a different perspective. The 50 % rule (effective control) has been met ( W and X) But the 80% rule ( controlling interest ) has not been met. Therefore… no brother-sister controlled group exists.