Appleby

The IRS issued amended Form 1099-Q for 2003. The amendment includes instructions to include distribution codes for death, disability, etc.…use of these codes are optional Box 4 has also been changed- it now says trustee-to-trustee transfer. http://www.irs.gov/pub/irs-pdf/i1099q03.pdf http://www.irs.gov/pub/irs-pdf/f1099q03.pdf

Not unless the client received a ruling from the IRS, allowing him to recharacterize his 1998 conversion at this late date. The deadline for recharacterizing a contribution/conversion is tax-filing deadline (including extensions). If the individual files his/her tax return by April 15, he/she receives an automatic 6-month extension, which means the deadline would be October 15 of the year following the year the contribute was made. (for 1998 conversions, the deadline was 12/31/1999). The client may want to ask the broker to cite the rule on which he/she based the information

Check the thread at http://www.benefitslink.com/boards/index.p...&hl=partnership - if this does not answer your question, please post a follow-up

The rule is that an employer may not maintain a SIMPLE in the same year the employer maintains another plan. If a plan is frozen, and no contributions, except for rollover contributions and forfeitures (except to the extent forfeitures replace otherwise required contributions)were made to the plan for the year, then the employer may establish and fund a SIMPLE . IRS Notice 98-4

It could be administratively cumbersome if any commingling occurs. At this juncture, involved parties may be better served to avoid commingling at all costs (IMHO). As far as ‘ the point’, I think it is the moral suasion of employers to encourage their employees to save, by making it easier to do so thought automatic payroll deduction , thereby reducing any financial burden these individuals may place on the government during their retirement years…

My thoughts… The separate trust refers to maintaining a separate trust documents to govern the assets and being able to account separately for the assets for each trust. Having these separate trusts does not prohibit the commingling of the Deemed IRA and the plan assets for investment purposes, as long as the separate accounting requirements are met. It seems commingling the assets would be an accounting headache, especially for small prototype plans for which the document provider handles the tax reporting.

You’re welcome Luke…and Thanks for the feedback. By process of elimination, we use Code 4 as none of the others seem to apply, since all payments (after the death of the participant) will be made to the beneficiary. As you know, the instructions for Code 4 for Box-7 states “Use Code 4 regardless of the age of the employee/taxpayer to indicate payment to a decedent’s beneficiary, including an estate or trust. Also use it for death benefit payments made by an employer but not made as part of a pension, profit sharing, or retirement plan.” In your opinion, what other Code do you think could apply, instead of Code 4? Hyperlink IRS publication 1220 Instructions for filing 1099-R, 5498 Etc.

Blinky- you lost me on this one. If we are talking about the same type of 401(k) plan from the original post, then the plans are usually drafted so that contributions are immediately 100% vested…. Also, if the plan covers only the business owner, why would top heavy status be a consideration?

Would a PLR work PLR_9144041.doc

Chip---I think the IRA must be involved somehow . Owning the assets in your IRA means holding it in your IRA as an investment, as you would with say stocks, mutual funds, bonds etc that are purchased in the IRA with the cash you contribute to the IRA. Holding it outside of your IRA means you used assets from your IRA to investment in a real estate venture/deal. For instance, say I own land that I want to develop. I am short on funds and you agree to help by lending me money from your IRA. I give you a note or some other form or note, with the details of the agreement, such as interest repayment and when I will return the funds to you IRA in exchange for the note and under what conditions. The note is held in your IRA in place of the cash you loaned me. Only, this is not a loan per-se. Like Archimage said, it is making the IRA a shareholder

It does not appear that the “outside the IRA and owned outright” concept was fully explained . Overall, there are many other issues to consider that were not even broached in the article. Similar to the “inside and owned by the IRA” concept, the “Investment restrictions, custodial fees, distribution rules and ultimately income taxes must be paid. All proceeds must go back into the IRA “ to which the article refers also applies to the “outside the IRA and owned outright” concept. Anyway, these transactions can be quite iffy. One must be extremely cautious and ensure that self-dealing does not occur.

addendum For the example you cite, the mistake of fact would occur when the clerk inputs the wrong age into the system ( or database that is your source for determining eligibility) - not when you failed to verify age and assumed the hiree was being truthful

Brian, You may be right, but not for the reasons you state. A “mistake of fact” does not occur because facts and circumstances were mistaken. A “mistake of fact” does however occurs when there is a clerical error... The erroneous input of data could be construed to be a clerical error

No- you should not

I think Gary Lesser can help you with this. http://benefitslink.com/GSL/QPSEP_profile.html

In all cases, the code in Box-7 would be ‘4’. Code –4 must be used when distributions are paid to the beneficiary

Try this link for starters http://www.benefitslink.com/boards/index.p...istake,and,fact

Take a look at this post- http://www.benefitslink.com/boards/index.p...t=0entry28911

You’re welcome pmacduff. Excellent question to clarify that point. Yes. The RMD is due for 2003 because the participant retired in 2003 and was already 70 ½. For instance, since the participant is already 70 1/2, if he retired in 2007, even though the RBD would be 04/01/08, the RMD would be due for 2007 and any amount distributed in 2007 would be attributed to the RMD until the RMD has been met.

pmacduff , an RMD for 2003 is required because that is the year that the first RMD is due. Any distributions that occur in the year an RMD is due is attributed to the RMD amount , until the RMD amount is satisfied. Treas Reg § 1.402(c )-2, Q&A 7. This rule is the same for IRAs and qualified plans The 04/01 is just an extension to distribute the RMD for the first year. If you already distributed enough to satisfy the RMD in 2003, then the 04/01/04 deadline does not rally apply anymore. This extension ( 04/01) is for those who did not satisfy the RMD by 12/31

jevd is right

The 401(k) plan for the small business owner, such as the one you described above, generally do not include a matching provision- only salary deferral and employer profit sharing. ... Why would you want a matching contribution…considering the 25 % deduction limit can be met with pure profit sharing contribution

Well I'll be d _ _ _ _!!! I did not see the 'non'. Shows why you must must must RFQ! Failing to RFQ is the stuff failing exams are made of y'know

Check page 47 of IRS publication 590 available at http://www.irs.gov/pub/irs-pdf/p590.pdf

If he attained age 70 ½ in 2002, then his RBD is 04/01/03. If he did not distribute the RMD for 2002 by 04/01/03, then he may owe the IRS a 50 percent excess accumulation penalty.( 50 percent of the RMD amount that was not distributed) The explanations given above would apply to the RMD for 2003.