Appleby

Gary, Under the old rules, this would be true. However, this changed for tax years after 1999. Beginning 2000, the rule that applies to Roth IRAs was made optional for traditional IRAs. Under IRS Notice 2000-39, the IRS permits the NIA to be a negative amount for IRA excess contributions. The examples used in this notice used to illustrate the new rule (using a negative NIA) show balances remaining in the IRA after the excess has been removed. The URL to IRS Notice 2000-39 is attached http://ftp.fedworld.gov/pub/irs-drop/n-00-39.pdf

I did some checking. It appears that only the US has the authority to tax any US earned income, including that from IRAs and retirement plans. .

For 401(k) plans, which the only contributions made are deferral and matching contributions, an employee who is eligible to make an elective deferral contribution and chooses not to do so is not considered an active participant. This rule would also apply to the SIMPLE plan

For SEP IRAs, an employee is considered to be an active participant, if he/she makes a deferral contribution and/or receives an employer contribution. IRC 219(g)(5)(A)(v) It would appear then that the same rules applies to SIMPLE IRAs. IRC § 219(g)(5)(A)(vi). Thus an employee who receives any type of employer contribution to a SIMPLE IRA , matching or non-elective, is considered to be active. We could also use the logic for define contirbutions plans, which for this purpose, may include SIMPLEs and SEPs

Yes. Such participant may commence distribution. The provision permits, but does not mandate, the participant to defer taking their RMD until they retire This would not be considered an in-service withdrawal. see following thread for further explanation http://benefitslink.com/boards/index.php?showtopic=12711

Distributions at 70 ½ are not deemed in-service distributions. By definition, an in-service withdrawal is one that may be taken when there is no triggering event, i.e. death, disability, termination of employment, termination of plan or attainment of retirement age. Since the maximum retirement age under a plan is 65, the participant would already have a triggering event (attainment of retirement age) at age 70 ½. I doubt a plan can be amended to prevent a 70 year old participant from taking a distribution.

I agree with b2kates. A 401(k) plan is just a profit sharing with CODA, therefore, why not just amend the profit sharing plan to add the CODA feature? Code Section 411(d)(6) addressers the anti cutback rules for optional forms of benefit. I doubt amending a profit sharing plan to add CODA feature would not be seen as cutting back on any optional form of benefit

at this link http://ftp.fedworld.gov/pub/irs-drop/n-02-3.pdf

Funny John, Made me smile. The possibility that the deceased had more than one trust must be considered-further; he could have meant a trust that is not his. Designating ‘trust’ as the beneficiary is tantamount to saying ‘child’. If he has attached a trust document to the designation form, then you can safely assume he meant the attached trust document. Alternatively, review any trust document provided by trustee/s to determine if it refers the IRA. Finally, have the trustee/s of the trust who submit a claim to the assets provide you with a written confirmation that the trust they represent is the one and only trust established by the beneficiary, that the designation will not be challenged, and have them indemnify you.

The deadline for making a 2001 participant contribution ( up to $2,000) to a Roth or traditional IRA is April 15,2002. The last day to do a Roth conversion for 2001 is December 31,2001

It is not necessary to keep them separate. When the conversion is done, whether for both IRAs or one IRA, you must file IRS Form 8606 to determine the taxable potions (i.e. amounts not attributable to the non-deductible contributions) of the conversion. Should you decide to recharacterize any portion, the recharacterization will be allocated pro-rate between amounts attributable to the non-deductible and deductible amounts.

The deadline for removing the excess contribution is the tax filing deadline, plus extensions, of the year for which the contribution was made Excess contribution that are not removed by the deadline, will be assessed a 6% penalty for every year the excess remains in the IRA For excess with negative earnings, you have two options. 1. treat the earnings as zero and remove only the excess, or 2. deduct the loss from the excess amount and remove only the net amount. The IRS made the second these optional when the issued the notice that permitted the second option [Regarding iterm 2, see below.]

No. A SIMPLE IRA cannot be maintained in any year that the employer maintained any other plan. It doesn’t matter which was done first. Furthermore, a SIMPLE IRA may not be terminated in mid year, unless the employer has an unavoidable circumstance that would result in termination of the plan, such as terminating the business. The fact that the employer wants to establish another plan, means that he/she has no grounds for terminating the SIMPLE plan

First I have a question. Is the entire $4,000 excess ? Answer to question number 1- If you remove the excess contribution in January 2002, you will be required to pay the 6% penalty for 2001. (The 6% penalty will apply to any excess contribution still remaining after December 31) The only exception to this rule are excess contributions removed by tax filing deadline , plus extensions, of the year the excess was made Answer to question number 2- . Attributable earnings must not be removed with excess contribution that are removed after the tax filing deadline (as stated above). This means that at this point, only the excess should be removed. Had the excess been $2,000 or less, you would not have been required to add it to your income. However, for excess contributions over $2,000 the amount must be added to your income for the year it was removed from the IRA. This means that you will be owe not only ordinary income tax on the excess, but the 10 % early withdrawal penalty if you are under age 59 ½. Answer to question number 3- .An excess contribution for one year may be applied to a future year for which you did not make a contribution. You would still need to pay the 6% penalty for the years before the year you applied it towards. To allocate an excess contribution form one year to the next, you must file IRS Form 5329 (consult your tax advisor for assistance with completing the form). This form is also filed to pay the 6% penalty/

90-24 refers to a revenue ruling that permits a participant, who has not separated from service or reached age 59-1/2 to change investments within by transferring from one 403(B) provider to another. The employer is not required to comply with this ruling. 90-24 has nothing to do with employer matching contributions. If your employer permits you to transfer your 403(B) account to another provider, then your employer may send your contributions, deferral and matching , to your account at such provider

txdd is right. You will not find it worded as such in IRS publication 590 and you may even get two different responses from two different IRA custodians... here’s why. First, the spouse must be treating the IRA as her own in order to convert the assets to a Roth IRA. The key is that the entire Roth conversion must be reported in the name and tax ID number of the spouse beneficiary, i.e. the distribution from the traditional IRA and the credit (contribution) to the Roth IRA. Some custodians are able to effect this requirement for the distribution by distributing the assets from what was once the deceased’s IRA. Other are not and will require that the spouse establish an IRA in his/her name and tax ID number, to which the assets from the deceased’s IRA will be credited. The conversion will then be done from this account.

John, I agree with you According to the disclaimer provision under IRC 2518, a beneficiary who disclaims the assets are treated as not having been a beneficiary of the IRA. Therefore, this means that by the spouse disclaiming the assets, the IRA now has no designated beneficiary.

Another PLR- similar ruling

Does this help? http://www.google.com/search?q=cache:CuB8g...+investor&hl=en

Moe, You’re right about the context in which I used the term

Generally, we do not combine inherited IRAs for the reason reg_h2b provided, i.e. how does one determine the life expectancy to be used for each inherited IRA?

Barry, What’s your basis for this interpretation?

It depends. I assume both sons are primary beneficiaries. Some custodians are able to perform the required tax reporting (i.e. under the tax ID number of the beneficiaries) even when distributions are done from the deceased’s account. However, most firms require that the assets be transferred to ‘inherited’ IRAs to ensure correct tax reporting.. If they are both primary beneficiaries, then the Roth is transferred to separate inherited Roth IRAs, one for each beneficiary.

Regarding the rolling over of after tax QRP to QRP. According to EGTRRA 2001, such a rollover must be done as a direct rollover between the two plans. This would take care of that documentation issue as the issuing plan would be required to include information that the assets represented after-tax contributions

Belgarath My understanding is that an employer is not permitted to implement any conditional requirements for participant to receive matching contributions under a SIMPLE 401(k), except that they must meet the eligibility requirements. Wouldn’t this mean that 410(B) does not apply to SIMPLE 401(k) pkans?.