lalaland

The TPA of a self-directed IRA administrator has just discovered an account that had a prohibited transaction in 2010. The TPA will report the prohibited transaction via the 1099-R. Should the TPA file the 2014 1099-R, or should a 2010 1099-R be filed showing the prohibited transaction?

No problem so long as passes coverage.

Form 5310, Line 21 requires a statement of net assets to pay benefits "as of the proposed date of plan termination or latest valuation date." Does "latest valuation date" mean the latest valuation date that was performed, or does it mean latest date that will be performed? For example, could the Plan's last Form 5500 valuation by the latest valuation date, since it was the latest valuation date as of the filing? The Form 5310 Instructions do not provide clarification. Thanks for any help.

Has anyone ever seen guidance addressing whether a participant in an IRA who has a fee deducted directly from the IRA could reimburse the account the amount of the fee, without it counted as an annual contribution? Thanks for the help.

I found the answer. It's in Notice 2008-51, and the trustee can rely on the account holder's certification. I can't figure out how to delete the topic.

A participant wants to take a distribution from his IRA to perform a qualified HSA funding distribution (under IRC Section 408(d)(9)(B)). The transaction is not reportable on the 1099-R, and shows up on the 5498-SA as a regular contribution. Is there any obligation of the IRA trustee to confirm the participant is eligible to perform such a distribution, i.e. has never previously performed on in his lifetime? Thanks for the help.

(1) No, assuming they are safe harbor through the date of the termination. (2) Is the deal an asset deal or stock deal? In a stock deal, if the plan is terminated prior to the acquisition, no problem. The plan can't be terminated following a stock deal. If the deal is an asset deal you wouldn't be asking this question because the plan would be an excluded asset from the deal and this wouldn't be an issue either.

This website.

I can think of a few examples, but here is one: Employer is terminating a DB plan and has a 401(k) Plan in place. Employer wants to give terminated participants the opportunity to rollover their lump sum payment into the 401(k), particularly if they already have a balance in the 401(k) anyway. It's no skin off the employer's back to accept the rollovers (if it's legally allowed) and if the participant doesn't have an IRA it is much easier to just rollover into the 401(k) than open an IRA. Employer certainly doesn't want to allow transfers or merge the two plans, however.

Thank you, this was very helpful.

Is anyone aware of guidance that either blesses or prohibits a plan from accepting rollovers by participants who have terminated employment with the plan sponsor? I have a particular plan sponsor that is interested in doing so.

Is anyone aware of an affirmative duty by an IRA trustee/custodian to investigate prohibited transactions it believes may exist? I ask in the context of self-directed IRA trustee who specializes in exotic assets.

Aside from the right of the employee to make a claim, failing to make the safe harbor contribution for an eligible employee would be an operational failure and a potential disqualifying event for the plan.

Thanks for the help. Your thoughts are the same as mine. Prior to EGTRRA, the IRS also interpreted "substantially all" as 85% for purposes of applying the same desk rule to a severance on account of the sale of substantially all assets of the company. This was in the prior verson of the 401(k) regulations in Treas. Reg. 1.401(k)-1(d)(4)(iv), but was repealed in the 2004 regulations because EGTRRA repealed the same desk rule. Its not determinative but shows what the IRS is thinking in the qualified plan area.

Has anyone ever seen guidance as to what the meaning of "substantially all" under IRC 409(h)(2)(B)(ii)(I) is? The Code permits an ESOP to require cash distributions (and not permit in-kind distributions) where the corporations charter or bylaws restrict "substantially all" of the employer securities to employees or a qualified plan. Does anyone have any idea what "substantially all" means?