Appleby

Regarding your question or the correct code... If the loan meets the requirement of 72(p), for instance, if the loan was within the 50/50 limitations, did not exceed the 5-year period ( unless it was used to purchase a primary residence), and repayments were made at least quarterly, the code will be ‘4’. If the loan did not conform to 72(p), the code will be ‘4L’…

pmacduff's opinion is in fact fact and his/her assumption is correct

Responding in order of your questions… Yes. Since the two companies are unrelated, then your contributions to one plan are not affected by contribution to the other No. The contributions are not required to be made prior to your new employment. You still tax-filing deadline, including extensions, to fund your SEP. Yes. When you are employed by two organizations that are not under the same ownership (part of a controlled group), the only contributions that are affected/aggregated are your salary deferral contributions. Had both plans been 401(k) plans, you could not have made salary deferral contributions in excess of $12,000 between both ( $14,000 if you are at least age 50 by year-end. )

If the trust is qualified, and the charities distribute their amount by September 30 of the year after the IRA owner dies, the friend will be able to distribute the assets over his life expectancy

OIC Tks

MGB, I have it in my head that the after-tax contribution is limited to 10% of comp. Can’t recall why. Do you recall this being the limit- of course within the maximum annual addition?…

All employees who work three of the five preceding years must be allowed to participate in the SEP. Employees who earn less than $450 for the year, employees under age 21, non-resident aliens and employees under a collective bargaining agreement may be excluded. For SEP IRA purpose, a years of service is any period , however, short. For instance, if the employee worked one week of the year, that is considered one year of service. The employer may use less rigid eligibility requirements , for instance reducing the years-of-service, age or compensation requirements.

mbozek…am I missing something here? Isn’t the maximum deferral 100 percent of Modified Net Profit - NTE the 402(g) limit?... The 20% would apply to the 404(a)(3)(A) limit...

Foreign earned income is not eligible compensation for purposes of establishing and funding an IRA. The type of currency in which you are paid is not a determining factor for IRA eligibility- the determining factor is whether the income is US income.

QDROphile – mind if I rephrase just to be sure we are on the same page?…Rephrasing… The husband cannot distribute assets from his qualified plan account unless he meets one of the requirements that allows him to receive a distribution from the plan, i.e. a triggering event. rephrased... There may be plans for which a QDRO is a triggering event. Regarding rolling the assets to the IRA for the husband and then transferring it to an IRA for the spouse/former spouse… a QDRO that is issued for a qualified plan cannot be used as the basis for transferring assets from one spouse’s IRA to another. For assets to be transferred from one spouse’s IRA to another, a divorcee decree must be issued for the IRA

No. A QDRO would be required to allow this.

The NSCC has established timeframes within which Automated Customer Account Transfers (ACAT) must be completed, and may impose a fine on the member organization that fails to comply with these timeframes. The NSCC and its members determine what is “sufficient” instructions, which are subject to further approval by the Settling member I am not aware of any such DOL requirements…not to imply there are none…

See if this helps Notice_2000_38.pdf

Hi Mary Kay, I noticed you were away for a little while---good to have you back Regarding the ability to pay UBI out of pocket, the IRS ruled in PLR 8830061 that this would be a contribution to the IRA as UBI is not administrative or trustee fees (which are the only IRA expenses that can be paid out of pocket…

Just to Mary Kay’s comments…If you receive money from a 401(k) plan as an alternate payee in a qualified domestic relations order (QDRO), any amount that is distributed to you as a result of this QDRO is exempted from the 10 percent early distribution penalty. However, once the amount is rolled to an IRA, it becomes subject to the IRA rules---this means that any distributions that occur from the IRA will be subject to the early distribution penalty, unless you meet one of the exceptions, which includes 72(t) payments as Mary indicated. ... The list of exceptions for IRAs do not include distributions due to a QDRO

Belgarath is right. Remember the premise of a matching contribution is to give the employee an employer contribution equal to the amount the employee defers*. If there is no deferral , there is nothing to match. jevd – your information is correct but only in respect to nonelective contributions. Maybe you misread the question? * Matching contributions are subject a limit of the lesser of the amount deferred by the employee or 3 percent of the employee’s compensation. ... the matching contribution cannot exceed the salary deferral limit for the year ( $$8,000 for 2003, $7,000 for 2002)

Doesn’t Fender Sales,Inc v. Comm, 22 TCM 550 (CCH) 1963 and Rev.Rul 79-311 address return of overpayment of compensation and the treatment thereof??? ... not sure it they could be applied to the treatment of distributions from qualified plans

Belgarath, I can’t seem to find anything that specifically addresses SEPs with respect to related VS nonrelated. I did review the cite you provide but I am still not convinced that it includes SEPs for the reason I stated earlier, i.e. the employee, never the employer, may initiate a distribution or transfer of assets from a SEP IRA. …also, remember that for a SEP IRA, only contributions made for the year are taken into consideration when determining top heavy status [iRC § 416(i)(6)(B)] . As you know, for qualified plans, it is account balances that is used. Wouldn’t including amounts rolled over from a SEP contradict IRC § 416(i)(6)(B) In many instances, 1.416-1 refers to mergers and transfers. These two types of transactions can occur only between two qualified plans, never between a SEP and a qualified plan. OK I know, I am stretching here but…

Harry , You peaked my interest. Generally, we allow such "recissions" when the transaction in question occurred as a result of an error made by a party other than the plan, plan participant, plan administrator etc. The intent is to make the affected participant ‘whole’. We use Wood v. Commissioner, 93 T.C. 114 (1989) and similar cases as our premise. Of course, as you may already know, there have been cases since then that provided opposite ruling- but that is another issue. I don’t recall seeing a Revenue Ruling to that effect. Do you think you can dig up the number?

PS..The withholding was handled properly – assuming the participant did not provide the necessary waiver.

Effective tax years beginning 01/01/02, distributions due to hardship are no longer rollover eligible. The participant has no choice but to retain the funds and treat it as ordinary income.- EGTRRA 2001 If the participant was under age 59 ½ when the distribution occurred., he/she will be subject to the 10 percent excise tax, unless he/she meets an exception.

I too would defer to the accountant…but want to add my 2-cents anyway I always thought that Rev. Rul 77-82 applies to any plan that is subjected to minimum funding standards- not just DB plans. I agree that Rev. Rul. 77-82 does not apply to Chip’s scenario as it ( Chip’s scenario) does not refer to a plan subject to Section 412. Rev. Rul 77-82 allowed contributions made in accordance with 404(a)(6) to apply to the following year for purposes of meeting the minimum funding standards- not for deduction purposes. PLR 9107033 also applies to plans subject to the minimum funding standard ...it granted an exemption to the 10 percent excise tax for nondeductible contributions, which came about because a conditional waiver was granted for the minimum funding standard for the year. The company was allowed to treat contributions for one year ( which met the requirements of 404(a)(6)) as contributions for the following year IMO, if the amount is contributed by the tax filing deadline for the year to which it applies, two things could happen. 1. The employer could apply the contribution ( for tax deduction purposes) to the year to which it relates or 2. Since the contribution is discretionary, apply it to the year it was contributed and deduct it for that year( of deposit)---unless the employees were already promised this contribution for 2002…

I doubt SIMPLEs and SEPs would be considered “related” Belgarath. Remember the determination of “related” applies only if the transaction is employer initiated… for SIMPLEs and SEPs, the rollover will always be employee initiated and therefore “unrelated”, even if both plans are maintained by the same employer. mbozek’s point about the 403(b) assets seems to make sense as well and I would alos apply it to 457 assets. IMO, “related” applies only to qualified plans assets …not IRA based plans, 403(b) plans or 457 plans.

I am not a CPA. But I do know that there is a $1,000 exemption. This UBTI has nothing to do with the IRA owner's other taxable income. In fact, the UBTI is reported under the individual’s EIN, not their SS#… If the UBTI exceeds $1,000, the IRA custodian files IRS Form 990T (along with filing form SS4 for those IRAs that does not already have a EIN). The IRS then responds to the IRA custodian indicating the amount of taxes owed by the IRA. The Custodian then debits the IRA for the taxes owned and remits the amount to the IRS. jevd is correct that prior year losses can be deducted. A Custodian may, before submitting the information to the IRS, inform the IRA holder of the amount of UBTI. The IRA holder at that point may provide documented proof to the Custodian of prior losses along with instructions to deduct these losses from the current UBTI. Even without receiving this notification from the Custodian, the IRA owner should be able to determine the UBTI for the year (but how may IRA owners even know what this is or the implications? Not many). This is why the notification from the Custodian would be helpful, especially if it includes an explanation of UBTI and the process.

An individual partner cannot establish a plan…the plan must be established by the partnership. For a Uni-k, Solo-401 (k), Individual (k) of whatever else it is called, all partners must be allowed to participate.