Appleby

The date is not requested on the IRS Form 5305-A. however, it is requested on most SEP prototype documents. In fact, one very large brokerage firm will not accept the document unless the initial effective date is on or before 12/31/96

Effective January 1, 2000, a taxpayer converting a traditional IRA to a Roth IRA and subsequently recharacterizing ( unconverting)that conversion may not reconvert that amount until the year following the conversion or 30 days after the recharacterization, whichever is later.

Spousal consent is NOT required for mandatory distributions, including Required Minimum Distributions

The plan can be transferred to another custodian. The restriction is on establishing new plan ( not new accounts). This will be a new account. Just make sure the effective date of the plan is noted on the paperwork. Such date must on or before 12/31/96.

Mary Kay, It is not the movement we should be concerned with, but the end result of the transaction. denisedawson, To determine the answer to your question, you must know the outcome of the actions taken by the processor. You have correctly stated that the RMD for the deceased must be reported under the tax ID number of the beneficiary. To effect this tax reporting properly, some practitioners require the funds to be transferred to the beneficiary IRA, because if the distribution is processed from the decease’s IRA, it will be reported under the decease’s social security number. Don’t get hung up on ‘from which account’ as this is just an administrative action- focus on, under whose tax ID number will the distributed be reported.

You cannot avoid paying the taxes. It is too late to recharacterize. The deadline to recharacterize for 1998 was 12/31/1999. Your only option now is to pay the taxes you owe. Withdrawing all the funds means you lose the opportunity of tax-free growth- that would be a bad move

Yes, You may convert non-deductible IRA assets. However, it is important to note that you cannot designate any part of the converted amount as attributable to the non-deductible portion, unless you file IRS form 8606, which will provide you with this information…according to the IRS, for purposes of determining the taxable portion of your IRA distribution ( or conversion), when you make non-deductible contributions, all your IRA balances are treated as one IRA. All these balances must be used in the computation, For example. IRA balance 1= $10,000 (deductible) IRA balance 2=$2,000 (non-deductible) You convert $1,000 from IRA balance #2. To determine the taxable portion of the $1,000, you must combine the balances of both IRAs. The taxable portion may be $900 (approximately). Use this form to make the exact determination. The link the instructions are also provided http://ftp.fedworld.gov/pub/irs-pdf/f8606.pdf http://ftp.fedworld.gov/pub/irs-pdf/i8606.pdf

Steve, According the to Roth IRA regulations, proposed and final, an IRA owner who is age 70 ½ or older must take the RMD from the IRA before converting the traditional IRA to a Roth IRA. “… if an IRA owner has reached age 70 1/2, any amount distributed (or treated as distributed because of a conversion) from the IRA for a year consists of the required minimum distribution to the extent that an amount equal to the required minimum distribution for that year has not yet been distributed (or treated as distributed); as a required minimum distribution, that amount cannot be converted to a Roth IRA…” It is important to note as well that for taxable years beginning before January 1, 2005, any required minimum distribution from an IRA is included in income for purposes of determining modified $100,000 AGI limit (for eligibility to convert to a Roth IRA).

I hear ya... This is such a coincidence. I had the same discussion with a very reputable retirements plan consulting firm (sorry no names)- which we just concluded this morning. The same website TAGDATA was the center of the discussion- it was referred to me by a client . The consulting firm is of the opinion that the Rev. Proc stands.

.... what's your take on TAGDATA's statement that the IRS is exceeding their authority? If there are two documents providing conflicting statements, then one must look at the document with the overriding authority. In this case, that would be the IRC.

Any distribution to the beneficiary of the retirement plan, including the RMD for the deceased, if such RMD was not taken before death, must be reported in the name and tax ID number of the beneficiary- not the deceased.

Check out this PLR

This does incude SARSEPS. A SARSEP is just SEP that allows for salary deferral contributions- ultimately, they are all treated like traditional IRAs with respect to distributions

True MGB, However, that has always been the case with the DB Plan. Now we have more benefits for someone who does not want to be burdened with obtaining the services of an Actuary. Wmyer Are you saying after tax contributions are not subjected to the 415 limit?

It depends on how you look at it. If the participant uses the 10-year period, this figure will be greater than if he/she had used the longer period, therefore the rules will not be violated (as the minimum amount will have been met). This is equivalent to saying, the RMD is one figure, but the IRA owner is permitted to take a larger amount that that figure.

Absolutely, especially since the $1,000 catch-up contribution is not subjected to any restriction, such as 415, 404 etc.

I just checked my mail box and saw your note- here is the link - sorry for the oversight http://benefitslink.com/boards/index.php?showtopic=35277

An in-kind contribution to a pension plan is a prohibited transaction because the contribution discharges the employer's legal obligation to contribute cash to the plan. See the authority attached

For $100,000 compensation the maximum amount is $36,000 ( for tax year 2002) $11,000- employee deferral $25,000- 25 percent (maximum deductible amount) employer contribution $36,000 total If the individual is age 50 or over, an additional amount can be made as 'catch-up' contribution

No guidance has been issued for this scenario. However I borrow from [springfield Productions, Inc, 38 TCM 74 (1979)], where it was determined that " If the check bounces, no contribution is deemed to have been made", ergo, no earnings that accrued from such contribution belongs to the account and should be removed, as soon as administratively feasible, without causing any tax reporting. The IRA custodian must make the decision of who is entitled to the earnings.

…as a matter of fact, EGTRRA pointedly state that the new portability rules does not apply to SIMPLE IRAs. Therefore, unlike the SEP contirbution increase issue, this is not an oversight, but intentional

No - According to IRS Notice 98-4, the only assets that can be contributed , transferred or rolled to a SIMPLE IRA are initial SIMPLE IRA contributions or rollover and transfers from another SIMPLE IRA.

... the IRS may extend the 60-day period for participants who are unable to meet the deadline due to reasons beyond their control, such as casualties and natural disasters. I doubt that would apply here. The IRS may however, grant exceptions to those who claim 'ignorance', through PLRs. Similar to what they are doing with those had had Roth IRA conversions and are now finding out they were ineligible to coverts.

Thanks Gary, From what I hear, it is expected that a proposal for technical corrections be made by year-end... the passage is another issue, as it may be furter hindered by political bureaucracy . If I hear anything definitive, I will let you know.

Gary, your response is logical. Yet…while the particular clause in the IRC that address the age 18 issue (IRC 530 (B)(1)(A)(ii), has not been stricken or directly changed by EGTRRA 2001, the added clause which addresses "time when contributions Deemed made" permits the education account to be funded "...no later than the time prescribed by law for filing the return of such taxable year" EGTRRA 2001 made no distinction that would exclude an individual age 18, from benefiting from the new deadline. Your thoughts…