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What Bill and Bird said... it could be a checkbook IRA for an individual but again, it would be for 1 person. Should be co-mingled like that.

I agree with everyone's comments but want to make sure. When you say the participant's spouse died 15 years ago, i'm assuming that the participant's spouse pre-deceased the participant and the participant didn't die 16 years ago. Because that would change who the beneficiary is and the probate requirements.

there are a lots of questions regarding this. The first thing I would ask is what is the relationship of the PE to medical marijuana company, are the providing direct funding via membership/book shares, is it a loan? I've seen people use self-directed IRA funds in various functionality where the PE was purchasing real estate specifically to lease to marijuana companies. I think you would have to look at the Offering Agreement to see how involved and the relationship of PE and marijuana company, that can provide insights to see if an ERISA Plan can invest in the PE. Also, the PE may not want an ERISA plan to invest in it b/c depending on how much is invested, could trigger the Plan Asset Rule.

thanks Lou

So would the tax code simple be "7" or "M7"?

Reading a previous question, I just want to make sure I understand this. I thought that if a participant had an outstanding loan and they obtained a qualified event like the plan allows for early distribution, that the participant would be able to offset the remaining outstanding balance of the loan due to qualifying event. So if John was 58 when he took a loan for $10,000, after a year and half, he decides that he wants the remaining loan balance (say it's $7400 now) to be offset because he's now 59 1/2, I thought that was permissible. Am I wrong?

There is no such thing as an "After-tax IRA", it's just an IRA that has after-tax contributions in it. It's the individual's responsibility to "ear-mark" as an after-tax contribution by filing Form 8606 with their 1040. The 5498 does not have a section to identify the contribution as an After-tax contribution. Also, there is a $50 penalty for failing to file Form 8606. If you're going to go that route and not going to cancel the 1099R, send it to a Roth IRA and request the transaction be reported as a Trustee to trustee conversion. That way, the 1099R wouldn't have to be corrected if it was issued with tax code 7 or 2, the funds would be tax free and the client would not have to file Form 8606. Also, the 5498 would reflect the Roth Conversion.

I though it had to be sent to the last known address.

When was the distribution taken? If it was taken in 2021, would it be possible to "undo" the distribution and just cancel it, including the withholding? If not, I don't think you can just re-deposit the funds back into the account as after-tax contribution because that is up to the client to report it as after-tax, you can't just ear mark that amount as "after-tax". At my previous company we had a suspense account that held all these types of funds. Eventually, the funds would get escheated.

Agree that would be the best way to handle it but I don't think you should push it either. if another participant did a hardship request and the cost seems higher than what you think or their contractor charges 20% more, would you have the participant get another estimate? I say just have him provide the backup that you would normally ask and just follow your procedures.

Hi Luke- I believe it was their age, they obtained the age 59.5 and the plan allowed in-service distributions. Thanks

I don't see anything against but wanted to make sure, is there a restriction that prohibits an in-service distribution from a 403b plan being rolled back into the same plan within 60 days? I don't think so but not 100% sure either.

If they are not willing to issue two checks, are they at least willing to provide a letter explaining where the funds originated from. If not, you ask for a statement or print your transaction showing the funding from Pre-tax and Roth and see if your new employer will accept that.

Just curious, is this something the recordkeeper wants to do or is this something the Individual Solo K plans are requested? I would think that the custodial agreement would determine if this could be done or not. Also, this sounds like a recordkeeper's nightmare.

Just a thought, is the 403(b) subject to EIRSA or is it a non-EIRSA Plan? If it's Non-ERISA than 5500 filing is not required, maybe that's why they haven't filed?

Not necessarily. The first question I ask is if the Trust is qualifying trust. If it is than you have to see how the beneficiaries of the Trust is set up. Are there sub-trust involved or is it a see-through to a person as bene, etc... If the Trust is not a non-qualifying trust, then you wouldn't be able to rollover to an IRA. I would recommend that they work with an ERISA attorney to determine if the Trust is a qualifying or non-qualifying trust and if it meets the requirements to see-through to a spousal beneficiary (as a person) to be able to do an assumption or rollover. Again, there are many factors regarding this.

I'm a little confused, why the check would include Jane Doe's IRA? If the trust is the beneficiary of the IRA it should be payable to the Trust. Obviously if there are other factors than I can see the payment going to the spouse's IRA. Is the Trust a Qualifying Trust and is it a see-through trust?

Hey Lou- I thought the one rollover per year rule was specific to IRA to IRA. In this scenario, participant get funds from Plan A and does 60 rollover to IRA than 3 months later does a distribution from IRA and does 60 rollover to Pan B wouldn't violate the one rollover per year rule since the funds did not go from IRA to IRA. Now if client takes distribution from IRA, does rollover within 60 days to same or another IRA and then takes distribution from IRA 3 months later, those funds are not eligible to be rolled into another IRA; however, they are eligible to go into a Qualified Plan. Am I misunderstanding this rule?

My understanding is that because it's a inherited IRA where the original owner as her brother-in-law, she cannot treat the IRA as her own and would have to continue the payments as is and cannot recalculate the payments.

hey CuseFan- can you provide the citation for the law you're referring ro. I thought the plan doc or custodial agreement would speak to that? Our has a specific language stating that if a spouse is a beneficiary and is divorced at the time of the participant's passing that they would be treated as having pre-deceased the owner and the contingent bene would come into play and the new spouse would only be eligible for the portion under community property. I may need to relook at this if this is the law. Thanks

I'm sorry about your dad's death and that your mom has to deal with this issue while grieving. Unfortunately, if a beneficiary designation doesn't exist the beneficiary hierarchy is governed by the IRA Agreement. I agree with shERPA that you should ask for a copy of the agreement. If the IRA is passed to the estate, and depending on the size of the estate, you may be able to go through the small estate process and avoid going through probate. If that's the case, your mom, because she is a spouse, could do a rollover of the IRA distribution into her account. Sorry once again, and good luck with this.

Hi all- I was looking back at some previous post (some over 10 years old) and I wanted to know if anyone had any updated information regarding Non-ERISA 401k plans (just high level information). Also does anyone know the answer and either source or citation for the following: Does a Non-ERISA 401k plan have reporting requirements, if so, i'm assuming fling under 5500? Can Non-ERISA 401k plan have Employer contribution element? Contributions to Non-ERISA 401k plan does not limit a participant's ability to contribute to their 457 plan, correct? Does the Non-ERISA 401k plan function like a ERISA 401k plan, same hardship requirements, RMD, etc... Also, does anyone know if there is a major difference between a Non-ERISA 401k plan and a ERISA 401k plan outside of who is eligible to sponsor one and possible reporting requirements. Any guidance would be helpful, thanks

Plans can take out loan but it has to be a non-recourse loan. They can't use anything as collateral and the loan must be made strictly on the merits of the property (e.g. you can't look at credit score or income of the participant). And assuming income is generated from the property, there will be UDFI (a segment of UBIT) owed by the plan. There are some banks that specifically do non-recourse loans

Thanks Luke for this information.

Does anyone know, I know that there is not a distribution hierarchy for withdraws from Designated Roth 401(k) plans, unlike a Roth IRA (contributions, rollovers, than gains). But on a withdraw from a Designated Roth 401(k), if the Roth is made of $10,000 salary deferral, $10,000 gains and $10,000 IRR(Internal Roth Rollover), and a client does a distribution of $3,000, would the distribution source have to be $1,000 from the salary deferral, $1,000 from gains, and $1,000 from the IRR; even though the IRR has not satisfied the 5 year rule. Or could the distribution source be $1,500 from salary deferral and $1,500 from gain?