basumukherji

I believe the answer is negative. Quote – “If an IRA owner dies after reaching age 701/2, but before April 1 of the next year, no minimum distribution is required because death occurred before the required beginning date.” IRS Pub 590, p-33, http://www.irs.gov/pub/irs-pdf/p590.pdf

In a 401(k) plan what is the character of the money and it's associated gains attributable to employee's deferral agreement? Is this considered employer contribution till distribution? This is in context of PLR 9806012, para 9 (excerpt shown below) Contributions made by the employer at the election of an employee pursuant to a qualified cash or deferred arrangement described in section 401(k)(2) are considered employer contributions rather than employee contributions.

I think you should look into filing IRS Form 4972. It has the details. Link: www.irs.gov

The place to look for is IRS Pub 590, p-65+. Link: http://www.irs.gov/pub/irs-pdf/p590.pdf

Layoff is not a complete seperation of service. Therefore, a 401k distribution without penalty may not be possible. Check with employer plan trustees.

No need to take full distribution in 2006. In fact you may change your 72t distribution arrangement in 2006. By that time you would be more than 59 1/2 year old and you would be satisfying the required 5 year minimum period (counting from 1999)

I do not believe there is any I. tax Traety with Taiwan. Taiwan is not listed in IRS Pub. 901. I recommend that you follow a strategy of deferring the taxes. Rollover the 401k to a self-directed IRA. For opening the IRA, choose an institution with internet access (most of the big name financial institutions such as Fidelity, C.Schwab etc. have that). This way you maintain maximum flexibility to direct your money to mutual funds, stocks, bonds etc. and engage in trading as and when opportunity develops. In future years when you take money out, you would owe taxes to Uncle Sam. You would be required to file Form 1040NR. There is one withdrawal option called "substantially equal payment" which allows you to take money out of an IRA even before age 59 1/2 without paying the 10% penalty. You may visit www.irs.gov and use their search for further information. Good luck

It appears that your uncle with a $5M estate should seek serious professional estate planning help. Assuming that at age 61, he is in good health, I would suggest you look into establishing a life insurance trust to pay for the estate tax. At the same time adopt an yearly withdrawal schedule and start gifting to heirs using the $10000 per person yearly gift tax free allowance allowed by the Internal Revenue Code. Be aware that income tax paid from an inherited IRA can be somewhat offset against any estate tax paid for that IRA. This is known as IRD (Income with Respect to a Decedant) rule

Background The assets in a 401(k) consist of mutual funds and employer stocks. At the time of service seperation, in a lump sum distribution, the mutual fund amounts are transferred to an IRA as a direct rollover and the balance is paid as employer stock certificates. The IRA amount is thus exempt from withholding. Under IRC section 402(e)(4), the “net unrealized appreciation” of the employer stocks can be treated as deferred income as an option and hence not subject to immediate withholding. Thus the only taxable amount in the year of the distribution is the “cost basis” for the stocks. Question Can an exemption from withholding be claimed on this “cost basis” amount under Internal Revenue Code section 3405(d)(8)?