Eligibility to Adopt Retirement Plan

[Guest sammy]

A "self employed" individual wants to establish a qualifed retirement plan. This person currently has a traditional IRA and wants to roll the money into a qualified plan to invest in certain investments which are not a permitted investments in an IRA.

This individual has retired, and while he may do some limited consulting work on a very intermittent basis, he is not actively employed. Therefore, it is possible that in some years he may have income from self employment, but in other years he may not. It is anticipated that no contributions other than the initial rollover will be made to the qualified plan.

Can this person establish a qualified retirement plan?

Is anyone aware of a requirement that a "self-employed" individual must be actively engaged in a trade or business or have income from self employment in order to estabish a plan?

Thanks!

[david rigby]

Yes. See IRC 401(d). http://www4.law.cornell.edu/uscode/26/401.html

[Guest sammy]

Thanks for the response. However, I read 401(d) as limiting contributions to a plan of an owner/employee on behalf of the owner-employee with respect to earned income.

Here we are talking about establishing a plan and making a rollover, but not making any additional contributions. I agree that any additional contributions made to the plan on behalf of this individual would be permitted only to the extent he has earned income.

Is there anything that prevents the establishment of the plan?

[Lynn Campbell]

What was the source of his traditional IRA?

[Guest sammy]

For the remained of this year we would be dealing with a conduit IRA. But starting next year it could be an IRA that also includes individual contributions.

[david rigby]

Oops. My earlier response of "Yes" was an answer to the second question in the original post. I think the answer to the first question is "No".

[Guest scott@hss-cpas.com]

I am trying to determine if non-charitable, tax-exempt organizations can have PS, MPPP, Db or 403(B) plans. these organizations would include credit unions, private clubs, civic leagues, etc. I know at one time they had them available, then not, but I can't find the current status. Any help would be appreciated.