Appleby

Yes- with the exception of the statement “RMDs must start in the year the new owner designates the account balance as his or her own "beneficiary IRA". “ The RMD must begin by 12/31 of the year following the death of the account owner. Some beneficiaries may be negligent and do not take control of the assets until after that period. For these individuals, a 50 percent penalty will be applied (by the IRS) for every required distribution amount not taken, beginning the year following the year the account owner dies.

mbozek, Not necessarily- refer to IRS Notice 89-52. A contribution in excess of the deductible limit (though unintentional) is NOT a mistake of fact. Regarding the 401(a) issue, this is only if the IRS disallows the deduction for the contribution.

Joel, I must disagree with your response. Successor beneficiaries are not permitted to use their life expectancy. This is how it works: - Scenario 1. Participant dies after the RBD and leaves the inherited assets to his children. If each child separates their portion into individual inherited accounts by 12/31 of the year following death, they are each permitted to use their own life expectancy. If not, then they must use the life expectancy of the oldest beneficiary. There is no joint life expectancy option for a beneficiary. (Unless you are a spouse beneficiary on an IRA who chooses to treat the IRA as his/her own) Assume that beneficiary #1 is age 45 when the account owner (participant) dies. The year following the death of the participant, which is when beneficiary #1 must start taking distributions, beneficiary #1 is age 46. His single life expectancy (SLE) is 36.8. Distributions must be distributed over 36.8 years. Assume beneficiary #1 name his 20-year-old son as the beneficiary of his inherited account. Beneficiary #1 dies at age 47, when his SLE is 35.8 (this must be determined on a non-recalculated basis), his son is not permitted to use his life expectancy, instead his son must continue to use beneficiary #1’s life expectancy to determine annual distribution amounts.

Rich, To answer your question directly- NO! The designated beneficiary of the fist beneficiary (referred to as a second-generation beneficiary) is not permitted to roll the inherited assets to his/her IRA or retirement plan in which he/she participates. The option to roll is available only to the spouse of the deceased participant.

See the article at this thread for information on deduction IRA losses. http://benefitslink.com/boards/index.php?showtopic=13826 Regarding making a contribution prior to April 15- yes that can be done. Note however, these is no deduction for Roth IRA contributions.

Roth contributions are not reported on the individual's tax return. Yes. The IRS received the information via 5498 reporting.

simbarat Good points, Don’t forget though that some 529 plans will permit contributions of up to $150,000 per year, or maybe even more in come cases

A copy of PLR 9144041 is attached.

This website, and others state that an UTMA or UGMA account may be transferred to a 529 plan. http://www.collegeillinois.com/en/faqs/faq...dimplations.htm See the very bottom where they ask and answer “Can I rollover my child's UGMA/UTMA account to College Illinois!? To transfer UTMA/UGMA assets into a College Illinois! 529 prepaid tuition plan you must first liquidate the UTMA/UGMA. As the custodian, you may then use the cash proceeds to purchase a contract.”

Generally arithmetical or clerical errors. Bear in mind that according to congress, such a mistake is very narrowly defined. If a plan is found to use the mistake in fact reason when it does not apply, it could lead to plan disqualification.

also, if your financial advisor makes any stock recommendations, you may want to consider investing in those

By “existing account” do you mean Roth IRA? 1099-B’s are not issued for IRAs. The 1099-B is issued for cash accounts when a broker exchange occurs (e.g. sale- liquidation). Generally, the amount reported on this form must be reported on your income tax return. You used the term “transferred”. If you are referring to moving the assets to the Roth IRA, should I assume you mean contribute? Contributions made to Roth IRAs are never taxed. Only the earnings, if you do not meet certain requirements. Therefore, there will be no double taxation. In order o contribute for the year 2002, you may write a check for the amount and have it deposited to your Roth IRA as a participant contribution. No penalty will be assessed unless it is determined that you are not eligible to make the contribution, and it therefore becomes an excess contribution and is not removed timely. See IRS publication 590 , at this URL http://www.irs.gov/pub/irs-pdf/p590.pdf for additional information excess contributions and eligibility requirements for making a Roth IRA contribution

The withholding rules for Roth conversions is similar to those for traditional IRA distirbutions. This , posted by CIGNA on benefits link, may help http://www.cigna.com/professional/pdf/2002...g_BulletinT.pdf

The ‘8’ in box 7 denotes the year in which the earnings is taxable- which is the year the contribution was made to the IRA. For a contribution that was made in 2000 and removed in 2001, the code should have been ‘P’, which denotes previous year. You need to contact the IRA custodian and demand that they issue a corrected form 1099-R. No amendment to your income tax return is necessary.

You had up to December 1999 to recharacterize all or a part of your 1998 conversion. The IRS has granted exceptions to some individuals. Some of these exceptions extend the deadline even up to this year. However, it appears that these extensions are grated in cased where the recharacterization was required to be done because the IRA owner was ineligible to do the conversion (example, exceeded the $100,000 MAGI limit)- not just became the IRA owner wanted to recharacterize because of devaluation or just for the hell of it.

You will be subjected to the 402(g) limit-- $11,000 for year 2002- between both plans. The employer limits however, will be determined separately

Your conclusion is right. Note that there is also a five-year period for amounts credited to the Roth IRA as conversion amounts. These amounts , if taxable at the time of conversion, would be subjected a a10 percent premature penalty if withdrawn before five years after the conversion, unless an exception applies. The first time homebuyer is an exception.

No.

Generally, a conversion may be recharacterized ( reversed to the traditional IRA) up to October 15 of the year following the year the conversion was done. ( to get the extension up to October 15, the individual must have file their tax return or an extension, by April 15.) However, you stated that she already took a distribution from the inherited assets. As per IRC 2518, a disclaimer cannot be done after a distribution of the inherited assets have been taken. The disclaimer must be done within 9 months after the death of the IRA holder, and before any distribution was taken.

True, There are also religious reasons why some individuals may refuse plan contributions- something about being compensated outside of their regular earnings diminishes what they do for their religion .

You must use the single life expectancy table. IRS publication 590 refers to it as “single life expectancy- for use by beneficiaries.” You can always withdraw more than the minimum amount. No penalty.

A contribution must be made for the third employee beginning plan year 2002. The requirements are number of stated years of the five preceding years. In your example, the employer performed services 1 year of the five preceding years. For a SEP IRA, the year of service is nay period “however short”. This means the technically, there is no entry date. However, practically speaking, the entry date is the first day of the plan year- January 1 for calendar year plans.

Note as well that that there income caps for individuals who wish to fund a Roth IRA. These income caps do not apply to a traditional IRA, except for deduction purposes... another detail to which you may want to pay attention.

You may contribute to multiple Roth IRAs, however, your contribution limit remains the same, i.e. $2,000 or 100% of compensations, whichever is less. Due to the fees that may apply to the individual accounts, it may not make financial sense to fund multiple accounts.

QDROphile, My understanding is that the alternate payee is not eligible to take a distribution until the participant who is giving up the assets is experiences a triggering event… unless QDRO is a triggering event under the plan. If QDRO is a triggering event, then the plan administrator can issue a check for the amount, even without any instructions from the alternate payee ( involuntary cash-out).