spiritrider

You can't rollover a Roth IRA or non-deductible basis in a traditional IRA to a qualified plan, but you might try Pub 590-A, page 21 or 408(d)(3) for the rest.

I don't see why not. The expenses can not be reimbursed by insurance, but HSAs are not insurance. This would be no different than receiving a hardship withdrawal and claiming a medical expense deduction. Of course you can't double-dip with treating the same expenses as HSA qualified medical expenses and also take a medical expense deduction for the same thing. A hardship withdrawal is an exception to distribution rules and not a tax benefit.

The elimination of the single life distribution for non-spouse beneficiaries will up-end a lot of estate planning. The exception for your minor children is a lot less than meets the eye. It is only until they are an adult at age 18. Then the ten year rule applies. Either they take distributions evenly across the ten years, getting massively whacked by the compressed trust brackets under the Kiddie tax rules for six years (18 - 23) or limiting distributions for those six years and getting massively whacked by having to distribute the remaining balance evenly over the last four years. A far fairer approach would be to require non-spouse beneficiaries to start with the decedent's divisor and subtract each year. It was after all their retirement plan and requiring the distribution across their remaining life expectancy would make sense. You could make a case that it never made sense for the decedent's retirement account be paid out during the non-spouse beneficiaries lifetime. To limit a relatively young decedent's distribution period for their children to ten years is a stab in the back by congress. Of course, the SS claim that we tax your SS contributions, because we will never tax your benefits was another massive betrayal. Why should we be surprised at another betrayal and stab in the back by the congressional criminals.

Well it must be ridiculous then. There is no requirement for a sole proprietor's one-participant 401k employee election to go anywhere, but from the participant to the one in same administrator into their own records for "possible" future request by the IRS. I would be surprised if the participant in the majority of self-administered one-participant 401k plans from the mainstream brokerages has ever completed an election. The brokerages mass market the plans as essentially like an IRA, but only larger contribution limits and provide little if any pro-active guidance.

If you are going to fraudulently back date a tax document. At least make it look formal, e.g. name/address/SSN of the participant, plan sponsor, election, signed and dated. I would think a TPA plan should require the sole proprietor to furnish them with a copy of the initial election and any change in the election on or before 12/31.

2% Shareholder-employees can not receive fringe benefits. Health insurance paid or reimbursed by the S-Corp is additional compensation and not a fringe benefit. So the exclusion of fringe benefits should have no effect.

Yup, a huge red flag. Even more so with the new 199A Qualified Business Income (QBI) deduction. They will be looking for S-Corps with excessive distributions, because that is what an S-Corps's QBI is based on. Not to mention that if the client in not a specified service trade or business and taxable income is >= the QBI phase range. Their QBI will be limited to 50% of their W-2 wages. No W-2 wages, no QBI. There will be problems with late FICA and FUTA payments and late W-2, but the failure to pay W-2 wages might fixable. It is a lot better than being determined to have unreasonably low compensation. The penalty is 100% of unpaid FICA. This not to say that the failure to have wages to defer from is correctable retroactively. It is two separate issues. The client needs immediate intervention by a knowledgeable CPA, if not tax lawyer or enrolled agent.

That may have been true prior to Obamacare, when coverage was extended to children < age 27. In order to do this a new "PPACA dependent child" was created, defined as any child (son, daughter, stepson, stepdaughter, eligible foster child, or adopted child) < age 27. As long as the 125 plan provides coverage for dependents (any child under 105b) they are eligible for coverage. There is no longer a requirement that the child be a tax dependent. This is what allows non-dependents covered under their parents HDHP to contribute to their own HSA, up to the full family limit, regardless of the parents contributions. There is really no double-dipping going on the above case or two unmarried parents with self+1 coverage. Just separate HSA eligibility based on coverage. This is true if the 125 plan uses section 105b for definition of dependent and not section 152. Almost plans did so after the passage of Obamacare.

Yes, the only determination of the HSA maximum contribution is your eligibility and coverage. Two unmarried individuals with a child together can both have self+1 coverage and each make the maximum family contribution. This may make sense depending on the employee share of premiums and any employer contributions. I know of one such couple who actually profit from two policies, because each employer's contribution exceeds their premiums. The downside is that both have higher family deductibles.

You are not subject to the rules for married people. Therefore, your combined HSA contributions are not limited to the HSA maximum family contribution limit. So yes, your daughter's finance can make the HSA maximum family contribution limit, because they have self+1 coverage and she can make the HSA maximum self-only contribution limit. However, only your daughter can make tax-free distributions for qualified medical expenses for their child and they can not do so for each other's qualified medical expenses. An HSA can only be used to reimburse the the qualified medical expenses of themselves, their spouse and and their dependents. The key point to remember is that HSA contribution rules, HSA distribution rules and income tax treatment of dependents can all vary.

While it is not substantial authority, here is the relevant Q&A from the IRS' SIMPLE IRA Plan FAQs - Contributions If an employee starts or stops salary reduction contributions in the middle of the year, can I make my 3% match based only on the compensation earned during the period they actually contributed? No, you must base your SIMPLE IRA plan employer matching contribution on the employee’s entire calendar-year compensation, regardless of when the employee starts or stops contributing during the year. The maximum matching contribution is always 3% of the employees’ compensation for the entire calendar year. Matching contributions may be made on a per-pay-period basis, or by the due date of the employer’s tax return (including extensions).

The reason you have not seen anything specifically addressing this is because a one-participant 401k is still first and foremost a 401k plan. There is nothing to address. Contributions by or on behalf of a one-participant 401k participant make them an active participant for the tax year of those contributions. As do SEP IRA contributions for the calendar year of those contributions. Self-employment and the lack of W-2 reporting is irrelevant.

Accepting that a one-participant 401k is standard 401k, with a very short list of one-offs. I have a few questions with regards to employee after-tax contributions. Specifically, the contribution deadlines and source of the contributions. Let me start with the things I think I know and ask questions of the things I am not sure about. Self-employed individuals can make their employee elective and employer contributions from personal funds on or before their tax filing deadline including extensions. Is there any reason that is not also true for employee after-tax contributions? S-Corp 2% employer elective contributions are deducted from compensation not already received with a pay date on or before 12/31. The contribution must be deposited as soon as it can reasonably be segregated from the S-Corp's assets. The S-Corp has until its tax filing deadline including extensions to make its employer contributions. Any ERISA 401k plan I am aware of that allows employee after-tax contributions, requires them be contributed from after-tax W-2 wages. However, I seem to remember conversations over the years, that nothing precludes direct employee after-tax contributions from personal funds provided that in the unlikely event the plan document and administrator procedures allow it. Is the deadline for S-Corp 2% employee after-tax contributions 12/31 or the S-Corp's tax filing deadline including extensions? Must the contributions be made from the S-Corp shareholder-employee's after-tax W-2 wages or can the contributions be made from personal funds?

I would suggest that the lack of the DOL safe harbor is a disadvantage. It seems pretty hard to justify that this one deferral can't be reasonably segregated from the S-Corp's assets in much more than a few days.

Medicare Part A and B are treated differently If you sign up for Medicare Part A anytime during the 3 months before the month of your 65th* birthday and six months after the month of your 65th* birthday, your Medicare Part A enrollment and coverage begins on the 1st of the month of your birthday. If you sign up for Medicare Part A anytime > six months after the month of your birthday, your Medicare Part A enrollment and coverage will be on the 1st of the month six months retroactively. If you sign up for Medicare Part B during the Initial Enrollment Period (IEP) in the 3 months before the month of your birthday, your Medicare Part B enrollment and coverage begins on the 1st of the month of your birthday or: The month you turn 65*, your coverage starts 1 month after you sign up. 1 month after you turn 65*, your coverage starts 2 months after you sign up. 2 or 3 months after you turn 65*, your coverage starts 3 months after you sign up. * If your birthday is on the 1st of a month, it is always the preceding month. If you sign up for Medicare Part B after the (IEP) with no eligibility for a Special Enrollment Period (SEP,) you can only sign up during the January 1– March 31 General Enrollment Period (GEP) and your coverage starts July and you will be subject to a penalty. I'm not sure when Medicare Part B coverage begins based a SEP. I'm inclined to think it might be either the month you sign up or the following month.

The first and last sentences of the quoted paragraph are really the operative statements. The second sentence is not descriptive enough. "The one-participant 401(k) plan isn't a new type of 401(k) plan. It's a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401(k) plan." As with any other 401k plan, no employees means no eligible employees. The one-participant plan document and adoption agreement of T. Rowe Price and Fidelity as well as many others (TPA or not) with the exception of Vanguard, allow the election of standard 401k age and service requirements. This means a small business selecting the correct adoption agreement eligibility options, can hire employees < age 21 or part-time employees who work < 1000 hours/year (including their children) and still maintain a one-participant 401k plan.

I stand corrected. The thread had been about 403b plans. I totally spaced on the fact @Spatel was referring to a 401k.

@Spate, you are getting too hung up on this concept of "control" of the 403b. If you are a 403b participant, the 403b annual additions must be aggregated with the annual additions of all qualified plans of businesses > 50% owned by you. . Bottom line, you can not contribute anything to a one-participant 401k. From IRS Publication 571 Tax-Sheltered Annuity Plans (403(b) Plans), Chapter 3. Limit on Annual Additions, page 4. Participation in a qualified plan. If you participated in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pensions of all corporations, partnerships, and sole proprietorships in which you have more than 50% control to determine the total annual additions @QDROphile, this is not a presumably separate business under 26 CFR 1.415(f)-1 Aggregating plans. The 415(c) limit is only separate for unaffiliated employers.

No the OP just made the statement; "withdraw from a 401k penalty free at 55 if you retire from your job during the year you turn 55." I was just making the point that this may not be as useful as people expect. Plans can place restrictions on distribution options. Some have such severe restrictions that it greatly reduces the value of "withdraw penalty free".

What is the definition of Emergency Medical Service Personnel for puposes of the age 50 exception for Public Safety Employees? Clearly it includes first responders, e.g. ambulance drivers, paramedics, etc... What about dedicated emgerency room personnel or hospital staff performing EMS as part of their job description?

Rollovers are allowed at any age upon separation. However, the age 55 penalty exception only applies to withdrawals from qualified plans that you separate from in the year you are >= age 55. You can certainly rollover to another plan or IRA. However, the distribution rules there apply. This can be both good and bad. If you separate >= the year you turn age 55 and rollover to an IRA, no age 55 exception exists on the IRA's distributions. However, if you rollover from a plan you separated from in a year < age 55 or from an IRA to your current plan. You can use the age 55 penalty exception for the full balance. As you might have been alluding to. Plan distribution rules still apply. A plan can only allow lump sum and RMDs. In this case the age 55 penalty exception may be less useful.

The term 'partner’ includes a 2-percent shareholder of an S corporation.

IRS Notice 2004-50 Q&A 81, requires that the employee's HDHP to be sponsored by the employer for employers to make contributions. An individually purchased Marketplace plan would not qualify. Q-81. Are employers who contribute to an employee's HSA responsible for determining whether the employee is an eligible individual and the employee’s maximum annual contribution limit? A-81. Employers are only responsible for determining the following with respect to an employee’s eligibility and maximum annual contribution limit on HSA contributions: (1) whether the employee is covered under an HDHP (and the deductible) or low deductible health plan or plans (including health FSAs and HRAs) sponsored by that employer; and (2) the employee's age (for catch- up contributions). The employer may rely on the employee's representation as to his or her date of birth.

As Bri stated, I think people are confusing two different limitations. Catch-up contributions are not included in the 415c 100% of compensation limit, but all employee and employer contributions including catch-up contributions can not exceed net earnings from self-employment. For some examples let's use 2017 employee elective deferral limit of $18K because it is easier: With $18K in net earnings from self-employment, someone < and >= age 50 are limited to an $18K employee deferral, because total contributions can not exceed $18K. With $24K in net earnings from self-employment: Someone < age 50 is limited to an $18K employee deferral + $3K in employer contributions, because the employer contributions themselves reduce compensation. Someone >= age 50 is limited to an $18K employee deferral + $6K catch-up contribution. Any employer contributions would reduce the catch-up contribution dollar for dollar, because total contributions can not exceed $24K. With $30K in net earnings from self-employment: Someone < age 50 is limited to an $18K employee deferral + $6K in employer contributions, because the employer contributions themselves reduce compensation. Someone >= age 50 is limited to an $18K employee deferral + $6K catch-up contribution + $6K in employer contributions. Any reduction in catch-up contributions would not increase employer contributions, because the employer contributions themselves reduce compensation.

That was helpful. Care to elaborate. Roth conversion recharacterizations were eliminated in the TCJA for conversions after 12/31/2017. Separate accounts had made Roth conversion recharacterizations cleaner, but even then unnecessary. Of the top of my head I can't think of any reason why separate Roth accounts for the Roth conversion would be necessary. Even If you wanted to do a 72t SEPP, on a portion of the Roth assets. That could be accomplished with a rollover to a new account at the time. I see no benefit to separate Roth accounts to track separate 5-year conversion clocks. I doubt there is any custodian who can't calculate these out of a single Roth account. So even if there are multi-year Roth conversions to avoid higher marginal tax rates, AGI and MAGI impacts on ACA premium subsidies or IRMAA. You must be that guy who when somebody asks you if you know the time, your helpful response is "Yes".