pmacduff

Matter of fact - just a short time ago I had a Dr. group where a young Doc has joined an older Doc to eventually take over the practice when the older Doc retires. Plan Sponsor was older Doc's entity name/EIN, I reported the change to the new partnership name & EIN". Client received a letter from the IRS that the plan did not file a return under the old sponsor name. Returned a letter to the IRS stating that the entity had changed and why and that was that. Now that seems to good to be true according to what MSN is facing!!!!!

Also - FWIW - don't forget that if a YOS applies to the safe harbor contribution then you lose the top heavy free ride if the plan is TH...

We also print them 2-sided. We have more and more of our larger plans with both pre-tax and roth so it would be a hassle (and kill many trees) to provide 2 notices to all the terminees. Not to mention if you forgot one or sent the wrong one as Belgarth mentioned. Simplification is the name of the game....

That was my argument as well, why not one notice?!?!? We will be combing into one doc!

according to a chart I obtained a short time ago (dated 09/03/2009); it is still not allowable to roll from a Roth IRA account to a Qualified Plan. (I think I printed this off of the IRS website, though, and it does contain the new information about rolling from a Qualfied Plan to a Roth IRA.) Sorry I don't have the cite for you....

you are correct cmp1454, the vendor did not let me choose the "H" code on the automated system, the only option was the "BG" Code. I have brought this up to them!!!!

masteff - thank you for the link - I should have reviewed that one but I seem to really have an issue when I try and search the boards for topics!!

ok - finally heard from the vendor. They cannot process this on their automatic withdrawal system so I had to send them in a "hard copy" detailed withdrawal request. They agreed with me that the 1099-R will have the gross distribution amount in box 1, taxable amount in 2a (which will basically be the total of her pretax accounts including profit share, 401(k) and match) and a "G" in Box 7. This participant did have a roth account as well. That could be processed on the automatic system to roll to the Roth IRA. They told me that she will receive 2 1099-R forms, one as indicated above and one for the roth portion. The roth 1099-R will be coded "BG" - Roth Direct Rollover/Rollover contribution. We are a small shop and I told someone else in the office I was amazed that this had not come up before esp. since it is one of the bigger vendors. I know there may not be many participants who would roll EVERYTHING into a Roth; including pretax, but I'm thinking it would have come up at least once in the first 9 months of the year!! Hope there aren't any 1099-R forms out there with a code "G" that rolled pretax to a Roth IRA and have no taxable amount in box 2a...Uncle Sam would be upset!!! Thanks all for your input.

Yes - I'm ok with the 20% withholding not applying and this being considered as a direct rollover and therefore code "G". My main concern is that the vendor will issue a 1099-R form with a code "G" but yet has no way to know that the rollover is going to a roth IRA (as opposed to a traditional IRA) and will not include the proper taxable amount in 2a. I heard from the vendor earlier today and they are "going to call me back" as they didn't have a ready answer!

sorry bird - Code "H" is a roll from a Roth account to a Roth IRA. This is regular pretax (deferrals, profit share, match) rolling from the QP to the Roth IRA.

Thanks - I read through that as well. From what I have read the mandatory withholding does not apply, but the 1099-R will show the taxable amount of the pretax rollover to the Roth IRA. That makes sense to me, however the vendor I'm questioning doesn't have any special coding to know that it is rolling to a Roth IRA. The website uses code G if I code it as a rollover. I'm trying to find out from them how they would know it was rolling to a Roth IRA and therefore need to include the pretax as taxable on the 1099-R reporting.

Now Tom - no fair picking on me cuz of my gender.... anyway I will try the DER BG. thanks for your help guys!!

I have my first participant request to roll 100% of her Plan balance into her Roth IRA account where her plan balance contains both pre-tax and roth monies. The plan is with one of the bigger 401k vendors, but I don't see the option for me to code the pre-tax portion as a rollover to the participant's Roth IRA. I have emailed the vendor for instruction, but wonder what others are doing. Also - I found the info in Pub 590 regarding rolling from a qualified plan to a roth IRA somewhat confusing. Does the 20% mandatory Federal w/h still apply to the pretax portion? any assistance appreciated.

Thanks BG & Tom. I think it may be "easiest" to save the test run to a file and edit the zeros out as BG mentioned. This client prefers the ADP/ACP test by last name (and not in comp order), but I can always run it in comp order take out the zeros, modify the counts and then resort on last name. Whew! (maybe it was just as easy to go in and override all manually to 12/31/2008; run eligibility and the ADP/ACP, and then go back in and change them back to original dates!)

Yes - and the IRS is providing 2 model notices - one for roth accounts and one for pre-tax (or non-roth)....that will mean 12 pages of tax notice for participants with both. I think they should have combined them!!!

I'd like to get a feel for what other Relius users do in this instance: I have a large (1000+ lives) plan. There are employees that terminate with no compensation in the current plan year. As an example - the client terms the employee as of 04/02/2009 but the employee has 0 hours and $0 comp in 2009. Employee was a participant in 2008; therefore Relius shows them in the 2009 ADP/ACP tests with $0 compensation. If there weren't many I could just code them with 12/31/2008 term dates and they wouldn't show in '09 testing. But there are a lot of them and I'm wondering if there isn't another better (easier!) way that would maintain the accurate term date per the client's records. Thoughts?

Sieve - isn't it also true that the "nonspousal beneficiary IRA" accounts that receive the qualified plan distribution must be distributed within up to 5 years? I was under the impression that these new accounts simply allow the nonspouse beneficiary to spread the taxation of the benefit over 5 years as opposed to taking it all at once.

Who is paying your Company's bill for the TPA work, final filing, etc.? That might be a place to start....

Gotta say, Tom, my favorite quote is: "I completely forgot I won $50,000.” And what actuary in their right mind would splurge on a new TV or bed; why we all know if the $$ was invested at 8.0% for the 45 years she has until retirement... well - need I say more?!?!!

See this post.....minimum distributions

so - just out of curiosity - do you all redo the loan forms to reflect what was actuallly disbursed? We are in the small plan market and do the calculation on the day the loan is requested and forms prepared. We have had vendors refuse to disburse the amount requested (after the market tanks, for example). I know it's not an exact science and as ACox mentioned you get answers "all over the board" but I'm wondering what's done if the loan paperwork doesn't agree with the loan check...

it was awhile back, but I had this same issue because the client did not have a profit share contribution for a year or two. The problem becomes an "employer" allocation to those with insurance, but no allocation to others. Also - because the premium amounts differ you don't have standard allocation amounts to each person. Our client began paying the premiums out of the individual participant accounts. That way, if there is no profit share, you have no discrimination issue. It's simply an investment type that some participants have in their account. I suppose if everyone in the plan has a policy, it might work but again have found that the Employer paying the premium is really a plan contribution and is not uniform by person.

thank you Scott!

ok - The 2009 RMDs were waived by Section 201 of the Worker Retiree and Employer Recovery Act of 2008. I know that if your first minimum was due in 2008 but you delayed it until April 1 of 2009, you must still take that RMD. Any ongoing 2009 RMDs were waived by the Act. Here is my question...5%+ owner turns 70 1/2 in 2009. First RMD is due no later than 04/01/2010. I believe that RMD is waived (as an '09 RMD), however the next RMD that would be due as of 12/31/2010 is still required as the 2010 RMDs have not been waived. Agreed?

Does the plan allow for cashouts under $1,000? If not I say you need the form. I also think it offers some measure of protection to the Plan and the Employer/Sponsor to have a positive election form from the person to show they requested the payout. Since the Employer must know where the participant is located, and the participant obviously wants the money, I would think the forms will come back very quickly. my 2 cents.