conduit IRA

[Guest slt]

In light of the new EGTRRA portability rules, except to preserve favorable capital gains treatment for participants born before 1936, would you agree that there is no need for a conduit IRA? What purpose would it serve? Assuming you already had an IRA, if you were afraid that you wouldn't have a job or be covered by another plan within 60 days after the date of your distribution, wouldn't you just roll the amounts over to the IRA that you already had (even if it had amounts not attributable to rollovers from qualified plans) and then roll the amounts later to an eligible retirement plan?

Thanks.

[Appleby]

None whatsoever... and to the best of my knowledge, once the assets are rolled to any IRA, the option for capital gains treatments is lost

[mbozek]

A: Not if the stock is transferred by a trustee to trustee transfer to an IRA.

[Appleby]

Originally posted by mbozek

A: Not if the stock is transferred by a trustee to trustee transfer to an IRA.

I recognize that the IRS sometime uses the term trustee to trustee transfer when they mean direct rollover.

A movement of assets from a qualified plan to an IRA must be done as a rollover. When this movement is done directly from the plan trustee to the IRA custodian (asset made payable to IRA custodian), it is a direct rollover.

Any distribution that is rolled (or partially rolled), including a direct rollover, to an IRA, conduit or otherwise, is not eligible for the capital gains treatment.

[mbozek]

According to an ABA panel in 1999, NUA is lost only if there is a direct rollover of the distribution. A trustee to trustee transfer preserves the NUA for later recognition. If an IRA is not available then the recipient could set up a qualified defined contribution plan such as mp or ps plan to receive the stock by a trustee to trustee transfer.

[Guest Harry O]

What is a trustee-to-trustee transfer from a qualified plan to an IRA? How does this occur so that (1) you don't have a rollover contribution, and (2) NUA is preserved while the shares are held in the IRA?

[mbozek]

Under the same conditons that a trustee to trustee transfer is completed between two qualfied plans. I Dont have any cite. If an IRA transfer is not doable then the recipient can set up a qualfied Dc plan and do a trustee to trustee transfer of the stock to preserve NUA.