Appleby

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.

I agree with mbozek. Withholding is never optional for distributions that are rollover eligible… with reference to the responsibility for withholding…there are some instances where the Brokerage firm would be responsible for the tax withholding even if the plan administrator is another party... For instance, if the plan document allows the employer to assign such responsibility to the brokerage firm---in this case, the brokerage firm would also handle the 1099-R and 945 reporting. This generally occurs with a prototype document...Notwithstanding, the said document may include a caveat where the withholding and tax reporting could be the responsibility of the plan administrator. You need to: 1. Find out from the brokerage firm why no withholding was performed 2. Check the plan document 3. Verify the elections made by the employer in the adoption agreement.

Assuming the loan is not in default, you could- 1) Have the loan payments deducted from your regular checking account or 2) Use Fidelity’s online auto-debit loan payment system to make a onetime payment of the full amount from your checking account These two options are inline line with the suggestions above Or 3) request a total distribution of your plan balance, with the amount representing the loan being treated as an offset. Have the eligible rollover amount (excluding the loan balance) processed as a direct rollover to your IRA or other eligible retirement plan. The loan balance…treated as an offset, would be rollover eligible…therefore, you could use the funds you receive for the loan as a rollover contribution to your IRA or other eligible retirement plan. Of course, consideration should be given as to whether you want your assets to leave the qualified plan environment and go to an IRA environment.

There may be some miscommunication. Generally, all the IRA Custodian requires is a distribution request from the IRA owner and an acceptance letter from the receiving plan. No withholding applies because the transaction would be a direct rollover. The code ( for box 7 of the 1099-R )would be ‘G’. The pooled or not pooled status of the account does not affect how the IRA Custodian will handle the transaction. Your contact at the Custodian may not be familar with the rules...ask to speak with someone else

You are right Jim. The 120-days apply if the rollover contribution is being made because there was a delay or cancellation of the purchase or construction of the home .

Another source of reference is DOL Adv Op 2000-10A though this contradicts my POV It is interesting to note that the DOL refused to give an opinion on whether the transaction would violate sections 4975©(1)(D) and (E) (see highlighted section). Notwithstanding … it is the IRS that has the final authority to determine if an IRA is disqualified as a result of a prohibited transaction, not the DOL

In Swanson v. Commissioner, the IRA formed the corporation and remained the owner of the corporation. In the example given by dh003i, wouldn't the IRA would be conducting a sale with an already existing disqualified person?. Note: Summary opinions may not be treated as precedent for any other case-- IRC 7463(b),

Are both spouses participants in the 403(b) plan (or any other retirement plan)? Because if only one of the two is a plan participant, the one who is not a participant may receive a full deduction if their modified adjusted gross income is less than $150,000 …the $54,000 limit would then apply only to the one who is an active participant

I’m with Barry . The type transaction mentioned above does not appear on any list of PTEs. IRC 4975(b)(1)(A) Defines a "prohibited transaction" as any direct or indirect sale or exchange, or leasing, of any property between a plan and a disqualified person;. Included in the definition of a plan is “an individual retirement account” Included in the definition of a disqualified person is : 1) an owner, direct or indirect, of 50 percent or more of ------- a) the combined voting power of all classes of stock entitled to vote or the total value of shares of all classes of stock of a corporation ------- b) the beneficial interest of a trust or unincorporated enterprise, For the purposes of the prohibited transaction rules it does not matter whether the business is incorporated

mcdonnell, 160 is a typo, it S/B 60. Cite for extending the rollover period from 60 to 120 days, when the distribution was for the purpose of a first time home is [iRC § 72(t)(8)(E)]

My initial reaction was similar to yours mbozek …but I did some digging and it appears that the ERISA Outline is right…this seems to be one of the exceptions to the rules you state above … Treas Reg § 1.401(a)-20 , Q & A 24(d)

All qualified plans must be amended for GUST… but technically, solo 401(k) plans already are. Remember the whole solo 401(k) provision came about as a result of EGTRRA, which is post GUST. Therefore any solo 401(k) documents, which will have been produced post GUST, will already include both GUST and EGTRRA provisions . Unless the employer is amending an existing 401(k) plan to modify it to be a solo 401(k) plan or operating an existing 401(k) plan as a solo 401(k) plan…then amendment is mandatory

chris is correct, A QDRO must meet certain requirements that cannot be satisfied with a legal separation agreement. See Notice 97-11- attached IRS_Notice_97_11.pdf

No. Tax filing extensions do not apply to making IRA contributions

pax Very funny...but so true to life. As a reminder for us to think outside of the box, I am printing this and displaying it in the office...

You’re welcome kr402, That’s what I suspected. A point of clarification… a spousal IRA contribution can be made on behalf of a non-working spouse as well as a working spouse. Generally, a spousal IRA contribution is made on behalf of a spouse who has little or no income. Note also that a spouse could be an active participant in a plan even if he/she was not employed for the year. For instance, some employers do not make plan contributions for a year until the following year. An individual may not be an employee in that following year, but because he/she received a contribution in that year, he/she is considered covered by the plan and is therefore an active participant for that year. Example: Jane was employed by ABC Company from 1998 to 2002. ABC Company decided to make a profit sharing contribution for year 2002 to each eligible employee, which includes Jane. ABC made their 2002 profit sharing contribution in May of 2003. Although Jane was unemployed during 2003, she is still considered an active participant for 2003, because her employer credited her account with her contribution during 2003. Because Jane is an active participant for 2002, assuming she files a joint tax return , her modified adjusted gross income, for purposes of deducting an IRA contribution is $60,000 not $150,000

kr402, For your category ( married filing jointly) , the figure remains at $150,000 for 2003. Therefore, if you and your husband’s combined adjusted gross income is less than $150,000 ( you must also include your income, if any), then a traditional IRA contribution made to your IRA is fully deductible…that is assuming that you are not a participant in an employer sponsored plan.

mbozek...Good point (and good financial planning strategy) about the spouse who is under age 59 ½, keeping the assets in an inherited/beneficiary IRA to avoid the 10 percent early distribution penalty on amounts distributed while he/she is under age 59 ½. QUOTE (mbozek @ Aug 15 2003, 01:42 PM) If I was in such a position and my IRA Custodian insisted that I transfer the assets to my own IRA, I would reevaluate my relationship with that custodian. … who wants to pay 10 % as penalty on distributions when you could avoid doing so. The Custodian should give the spouse the option to choose (between having the inherited assets transferred to an inherited/beneficiary IRA-“ in the name of the decedent with the spouse as owner/beneficiary” and having the assets transferred/rolled to the spouses own IRA). Addendum… a beneficiary who chose to have the assets transferred to an inherited/beneficiary IRA may later transfer the balance to his/her own IRA. This could be beneficial for an individual who wants to take lower RMD amounts, by using the uniform table as opposed to the single life table (which would be required for the inherited/beneficiary IRA.

On the issue of handling the RMD for the year of death, the consulting firm is correct…Derelict and mbozek are also correct... While on the surface it appears that there is disagreement here, I think there is actually no disagreement. You see… the matter is one of operations, i.e. how the transaction is handled. From the comments made, it appears we all agree that the end result should be the same…i.e. the RMD for the year of death (assuming the IRA owner did not fulfill this RMD amount before death) cannot be distributed to and reported under the tax ID number of the deceased. Instead, such amount should be reported under the tax ID number of the beneficiary and is taxable to the beneficiary. How this is handled operationally is usually determined by the capabilities of the systems used by the financial institution to process such transactions. Some financial institutions are able to flag the original account as the owner being deceased, add the name of the beneficiary to the title, process the distribution from the same (original ) account and have it reported under the tax ID number of the beneficiary and the names of the beneficiary and the deceased. Other financial institutions, because of system limitations, must move the assets to a separate account to accommodate the required tax reporting. For both methods, the end result will be the same.

Rex, It depends… The once-per 12 month limitation applies to each IRA ( i.e. on a per IRA basis). Therefore, unless the assets being held in this particular IRA was already distributed and rolled over within the last twelve months, she is allowed to perform the distribution and rollover ( within 60-days). She may use the assets for any (legal) reason. A rollover IRA ( AKA Conduit IRA) by definition holds assets that were distributed from a qualified plan or 403(b) account. A rollovers of assets distributed from a qualified plan, 403(b) plan or a 457(b) plan does not affect ( is not part of) this rule.

Moe, Maybe what you read referred specifically to a 5305-SEP?

An employer may pair a SEP IRA with a qualified plan ( such as a money purchase pension, profit sharing 401(k), defined benefit plan…)…However, the SEP cannot be a 5305-SEP. It must be a prototype SEP or an individually designed SEP

Good point John. I did notice that and in retrospect, I should have addressed it (instead of assuming that it was a given that was insinuated within my response). I stated “60-days” for the rollover because the distribution did not meet the requirements for a first time home. If it did (meet the requirements for a fist time home) the rollover period would have been increased (from 160) to 120-days.