Form 5310 and loans

[BenefitsBum]

Hi

Any practical suggestions for responding to line 19, which requires submission of proof that any rollovers or asset transfers received by the plan applying for the determination letter were from a qualified plan or IRA?  For instance, is it sufficient to describe the plan's rollover process in general?  Or is the IRS looking for something more particularized for each rollover accepted?

Thx

[Luke Bailey]

BenefitsBum, it really does seem like an overbearing question. Maybe others will have thoughts as well, but I recall that the IRS back in that time period was frustrated that plans were not readily permitting rollovers, and when it inquired at professional meetings what it could do to encourage rollovers, one of the things pointed out was that statement in 5310 instructions, which you will note date from 2013. Certainly, it implies a higher standard of proof regarding the qualification of the rollover than the regulations (1.401(a)(31)-1, Q&A-14(b)(2), Example 1), would seem to require. In 2014 IRS issued Rev. Rul. 2014-9 in an effort to get folks  to lighten up. I think that if you have anything that would qualify as proof under 2014-9, you should be good. Essentially, proof that check was issued by an entity that plausibly would be a plan or conduit IRA, and the participant's certification. Here is a key quote from 2014-9, but you should read the whole thing on IRS website:

In 2014, Employee A requests a distribution of her vested account balance in Plan O and elects that it be paid to Plan M in the form of a direct rollover. The trustee for Plan O distributes Employee A’s vested account balance in a direct rollover to Plan M by issuing a check payable to the trustee for Plan M for the benefit of Employee A, and provides the check to Employee A. Employee A provides the plan administrator for Plan M with the name of Employee A’s prior employer and delivers the check, with an attached check stub that identifies Plan O as the source of the funds, to the plan administrator. Employee A also certifies that the distribution from Plan O does not include after-tax contributions or amounts attributable to designated Roth contributions.

[BenefitsBum]

Thanks Luke.  

[Bird]

We get a certification from the employee that it really is qualified money (with options for IRA, plan, 403(b) etc) and I believe that you are in fact supposed to get such a certification - it would seem that's what they are looking for.

[RatherBeGolfing]

irs.gov sort of addresses the Rev Rul 2014-9 and Form 5310 issue.

 

Quote

 

Form 5310

The instructions for line 19 of Form 5310, Application for Determination for Terminating Plan, mentions one way of satisfying the due diligence requirement for accepting rollover contributions, but don’t provide an exhaustive list. Plan administrators should use the examples in Revenue Ruling 2014-9 to help them in accepting rollover contributions.