Belgarath

Jquazza - just one quick observation here - for VS plans, a current favorable advisory letter for the VS plan itself is considered a favorable letter for Voluntary Correction purposes. See Section 5(.01)(4) of Rev. Proc. 2003-44. I'm assuming, of course, tht there's no deviation from the approved VS doc, otherwise I agree that a FDL is required.

Merlin - I'm just speculating here, but does the accrued benefit perhaps have a definition that says something to the effect that the accrued benefit is the cash value of the contracts, assuming all required premium payments have been made? That would make more sense to me, and is in line with 412(i) docs that I have seen - and it would be impossible to end up with a zero value on an annuity policy in that circumstance. (And I'm not going to discuss a plan that has only life insurance, 'cause that would be verboten anyway) If the document doesn't say something to that effect, somewhere in the document, then I would say it is a faulty document.

Thanks for the followup posting!

See 1.401(a)(9)-2, Q&A-5. This is for a situation where the participant dies ON OR AFTER the RBD. Minimum distributions from the plan, even to a spouse in this situation, must be distributed "at least as rapidly" as under the distribution method being used as of the date of his death. However, as you mention, a surviving spouse has a rollover option under 402©(9). Any minimum distribution required for the year of death is not an eligible rollover distribution, and needs to be distributed. The balance, if distributed as an eligible rollover distribution, can be rolled to an IRA (or other eligible retirement plan) and further minimum distributions (when required) will then be calculated based upon the life expectancy of that surviving spouse.

See, this is precisely why I refer them to an attorney! Thanks for the information - this helps to clear it up for me.

mbozek - the original question was whether you can contribute to a SEP AND another qualified plan in the same year. I don't disagree with you at all that the two plans can be "maintained" in the same year - and that for a non-model SEP it is fine to contribute to both in the same year - but I do question whether the answer given to DGM that it is ok using a model SEP, without some official guidance. It's an open secret that many IRS telephone answers are incorrect.

FWIW Tom - The DOL release just refers to the code - it doesn't impose any new "immediate" requirement. Code 401(a)(31)(B)(ii) as amended by EGTRRA 657, refers to an "eligible plan" as one where the benefit not exceeding 5,000 shall be "immediately distributed." I interpret this merely to distinguish a plan that provides for mandatory distributions of cash out benefits from a plan that does NOT provide for them. So I don't see that any change is required from whatever you do now, other than the mandatory rollover of the cash out benefit, when paid.

Sorry - hit wrong button. Reply coming.

Mbozek - I'm truly not trying to be difficult on this, but I'm finding this rather confusing. (I should preface this by saying any such question, we would tell the Plan Administrator to seel legal counsel.) Having said that, how do the heirs of a deceased child enter into this? If the plain language of the bene designation says the plan is to distribute it to SURVIVING children, isn't the plan legally obligated to pay only to surviving children? In other words, say I have children A, B, and C. My bene designation (perhaps unwisely) says to pay all plan benefits equally to my surviving children. If, at the time of my death, C has predeceased me, isn't the plan payout a simple 50/50 split between A & B? Just because C had children, shouldn't mean they are entitled to anything, should it? Wouldn't ERISA preempt state law? I would think these other considerations would come into place if, for example, the beneficiary was the estate. Then once paid out of the plan to the estate, then state law would govern? Thanks in advance!

Tom - I'd have to go back and read the release to be sure, but offhand, I don't recall any change in the requirements for the timing of the distribution. The plan document still governs, etc... so the only change is that once you are ready to make the payout, under the same timeframes you would otherwise have used, you now have the mandatory rollover requirement.

DGM - this is very interesting information. From my own perspective, being essentially very conservative on these issues, I wouldn't dare rely on a telephone statement from an unnamed IRS person to go ahead and do this. Until I see, at the very least, some statement from IRS folks at a public forum that allows you to simultaneously contribute to a model SEP and another QP, I wouldn't do it. Did this individual you spoke with indicate whether the IRS was planning on a formal release with the clarifying information you were given? Thanks!

Thank you.

This is pretty hard to answer, since the document terms will govern. Some documents, by the way, still provide that you start taking RMD's at age 70-1/2 even if you are not an owner. In general, the plan will specify when a benefit is payable, such as normal retirement date, etc.. It will also have language specifying that even if a participant has elected to defer receipt of their benefits as permitted by the plan, that the minimum distribution requirements will override the election to defer receipt of their benefits. So the plan will distribute the required minimum, whether the participant wants it or not.

You can have a SEP at the same time as another QP. You just can't do it using the IRS 5305 model SEP document. But there are many places that sponsor prototype SEP's that would allow a combination.

I wasn't going to say anything, but I suppose since we are all a bit inclined toward technical language, that this should be "rangifer" rather than wapiti. Wapiti is an elk, I believe. I recall a little story about Rudolf Nicholyevich, who lived with his wife near Gorky Park. One afternoon, as he was eating his meal of tea, borscht, and black bread, he looked out the window. "Would you look at that" he grumbled to his wife, "It's starting to rain." "No it isn't" replied his wife, "It's snowing." He said, "NO, it's raining." She replied yet again, "No, it's SNOWING." Whereupon he replied, as you've already guessed, "Rudolf, the Red, knows rain, dear."

Gburns - sorry, perhaps I didn't make my question clear. I know what the IRS said - I read the PLR. I wanted to know what Code Section(s)/Reg(s) that YOU think permit a surviving spouse do do a rollover, not in the surviving spouse's name, but in the name of the deceased spouse. That's the part I found odd in the PLR - obviously many folks have read these differently than I have, and it appears they were right and I was wrong. Not the first time, and won't be the last! So I'd appreciate your insight as to which Section(s)/Regs(s), under a literal reading, say that this can be done. I want to read it from someone else's viewpoint (that it is permissible) so I can see how I misinterpreted them before. Thanks.

All right, the general tenor HAHAHA of these titles reminds me of a little story my father wrote. At least he says he wrote it, and I believe him, although it is possible he's pulling my leg. But since he has the best vocabulary I've ever encountered, he probably did write it. Or could have. Has nothing whatsoever to do with Christmas, but you may enjoy it anyway. The Triad of Diminutive Porcine Quadrupeds The initial diminutive porcine quadruped fabricated his domicile of dessicated monocotyledenous herbage. The rami of angiospermous arborescent flora constituted the habitation of the secondary diminutive porcine quadruped, but the tertiary diminutive quadruped assembled his commorancy from adamantine hexahedrons. Then comes one Canis Lupus, petitioning entrance seriatim into each domicile by minatory declamations concerning extreme aeolian perturbations. The negativism expressed by the first two porcine quadrupeds brought about an ex parte response by the Lupus and the subsequent aeolian demolition of their domiciles. Shortly thereafter, said Lupus engaged in porciphagous gourmandising. Finally Canis Lupus approached the commorancy of the tertiary diminutive porcine quadruped and petitioned entrance by the same minatory pronouncements. The porcine's antiphon was, "The hirsute component of my lower mandible's distal extremity renders the option of breaching the exterior of my edifice a nullity." Thereupon, the Lupus repeatedly created aeolian perturbations of the most severe sort until he was totally enervated, but the commorancy of hexahedrons proved totally renitent.

All I want for Christmas is my two front teeth?

GBurns and BPicker - I hadn't realized that the regs allowed this. I had always understood that while it was clearly allowable for a spouse to roll over the deceased's account to their OWN IRA, I had always understood that the Services position was that a rollover was otherwise "personal" - could only be elected by the IRA owner. Obviously I was incorrect. Not that it necessarily matters now that the IRS has said it is ok, but I'd like to educate myself on this a bit - what specific section(s) of the regs is it that you interpret to allow this? Thanks very much.

Do - I might suggest that if you hope to get contructive answers on these boards in the future, you might want to refrain from that type of comment. Remeber, you are the one who solicited help. Mbozek provided a reasonable answer - you may not want to take the advice, but you aren't helping your cause any. These boards are for discourse between professionals, and although there are sometimes some intemperate responses, those who engage in that sort of conduct quickly get a "reputation." I would hope you don't want to be listed among them.

I agree. Although if in the 401(k) no employee made deferrals and if there were no employer contributions, then I think you could have the SIMPLE. I don't imagine that this is the case here...

See instructions for form 5304, under "Which Employers May Establish and Maintain a SIMPLE IRA Plan?" http://www.irs.ustreas.gov/pub/irs-pdf/f5304sim.pdf

I would use 001. There would have been no reason to assign a plan number to the SEP.

Did anyone else find this odd? While it displays an unexpected level of flexibility and generosity by the Service, it does seem like a great departure from prior practice to allow the spouse of the deceased to exercise a rollover in the name of the deceased. I wonder if this will remain as quasi-official IRS thinking or if it will be changed in a future letter or ruling. Maybe the application is narrow enough so they didn't see it as a big deal?

mbozek - heckuva bad case of suicide, isn't it? If he isn't careful, Eli Manning is going to be joining him! Maybe it's really Jim Morrison in Grant's tomb. Pax, neat website article - I didn't know his wife was there either.