jpod

I don't know the answer. ERISAToolkit has given you an answer. If you feel the answer is not so clear (and I don't know whether it is or is not), wouldn't the advice be: "Don't do the rollover"?

Why are you worrying about TH if the owner is the only participant?

If the bonus goes and can only go to the IRA, there is (in my judgment) no PT and therefore 93-1 is irrelevant. Also, I don't think even IRS would consider treating the bonus as a contribution by or on behalf of the depositor. It should be considered earnings of the IRA.

What I am saying is: Where is the PT if the gift for doing the rollover is that a bonus of $500 will be deposited TO THE IRA?

Payments of deferred comp. are reportable on W-2 if it was earned the individual's capacity as an employee (with an exception if the payment is to the employee's death beneficiary), or a 1099-Misc if it was earned as an independent contractors. Sal, how the money is paid out has no impact on this. There are many possible citations, but I would send you first to the W-2 and 1099-Misc instructions. However, I am confused and also curious about your reference to Section 1035. Can you expand the details behind your question? Perhaps toolkit and I are trying to answer a question you didn't intend to ask.

While I see your point, the general rule of 402 is that the "distributee" is taxed, the only exception being the take-out rule for APs who are not spouses or former spouses. Therefore, one could argue that since the AP's beneficiary is not an AP the special take-out rule doesn't apply and the general rule applies. If that argument doesn't work for some reason, I would chalk it up to being a non-sensical result otherwise, and advise that reporting the distribution as taxable to the AP's beneficiary is a low risk proposition.

Insofar as ERISA compliance is concerned, I would start with the Form 5500 instructions for "DFEs."

Uh, how about having the plan sponsor appoint a new trustee (assuming there is no automatic successor as per Belgarath's suggestion, or the successor is not someone the plan sponsor likes as a trustee)?

What kind of "trade or business" is this? I'm sure you are certain about this, but I'll ask: No guaranteed payments on the K-1? No W-2 wages (partnerships often think, mistakenly, that a partner can get both a W-2 and a k-1)?

I haven't seen a new one in many years, including many years before EGTRRA. Why anyone would intentionally subject themselves to the J&S requirements is beyond me.

Did you check the boxes when preparing the 5500? If so, what did you tell the client about those boxes when you forwarded the 5500 for signature? If you did not check the boxes, did you give your client guidance about those questions when you forwarded the 5500 for signature? If you didn't prepare the 5500, then I don't think you need to run or run quickly, but why your client would be asking you for your opinion on this issue is beyond me.

QDRO: I assumed that the question was the dealine for a self-employed person to deposit the EDs, as opposed to when he/she must "elect" to defer. I think the deposit deadline is in fact the tax return deadline.

Not sure what you mean when you say "both." If the only assets are illiquid, what difference does it make what they are worth?

Scuba: I am not able to decipher your question. Are you saying that the plan/account is illiquid or are you merely saying that some assets are difficult to value but there are other liquid assets? If the latter, you just take your best shot and for MRD purposes you err on the side of valuing it too high.

I would mention to the client that they can't be k-1 partners for certain tax purposes and ICs for qualfied plan purposes. It would be good if you can get something in writing from the client confirming that it was mistake to report their comp. on a k-1 and that they are truly ICs.

I am not seeing the reason to take a taxable distribution to avoid a taxable deemed distribution.

Paying the RE tax is what blows up this thing. If he personally pays it is either a pt or an impermissible contribution to an IRA.

1. RMD question is one which should have been considered before the investment was made. I am guessing that a separate IRA was set up solely to hold the real estate, and that he has other IRA holdings in one or more other IRAs, in which case the RMD can be satisfied from that/those other IRA(s). If not, he has a big problem, and probably no choice but to take a distribution of all the real estate and pay taxes on the full value of the real estate. 2. The real estate taxes are a liability of the IRA holding the real estate. If there is another IRA, the simple answer is to do a trust-to-trust transfer of enough $$ from another IRA to that IRA to pay the taxes. If there is no other IRA, it would appear that the only solution is to take a distribution of the real estate from the IRA and pay taxes on its full value as described in #1, and then pay the real estate taxes out of the individual's non-IRA assets.

But that analysis assumes he CAN use it as collateral, and I am willing to bet you that the documentation for the plan says he CAN'T (if the document was thoughtfully drafted by someone with tax law knowledge).

Ironically, even in the scenario you proposed you are likely ahead of the game even if you forfeit $200. Assume you are in the 15% Federal income tax bracket. Salary reduction of $1,000 saves you $226.50, when you add in the combined FICA/Medicare tax rate of $7.65%. So, you lost $200 but you gained $226.50, so you are ahead a net of $26.50.

The "hoops" to which I referred can be found in Section 408© of ERISA and 29 C.F.R. Section 2550.408c-2.

I doubt it, because most likely the deferred comp. accrued under the arrangement cannot be assigned in this fashion in the first place, so what the lender and borrower may think is good collateral really isn't.

I assumed it was a single E plan but sometimes if you're negotiating yourself out of a multiemployer plan the union may insist that it be represented on board of trustees or investment committee.

Who is responsible for investment decision-making/supervision in each plan? If Union reps are involved with each plan, might not be workable or even politically correct to have a mixed marriage.

There are some hoops to jump through. Hard to believe in this day and age of daily val plans and bundled service providers that you have 2/3 of an employee working full time on your plan. Assuming it is the case, wouldn't it be simpler to reduce the employer's annual discretionary contribution by the 2/3rds of the cost to carry this employee?