- quote -

So if I am reading this right, even in CA a "rollover" is
different than a "direct rollover." My concern over the
semantics as been expressed by two prominent CPE instructors
so I believe it is more than just an NC thing. Perhaps it
is more an east coast - west coast thing.

Regardless, I think I have beat this dead horse enough.

--
Drew Edmundson, CPA
Cary, NC

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- quote -

I think the only issue is the whether "most" or "common
usage" is the proper describer. Many of the preparers I
know hardly use the term trustee to trustee transfer. They
call it a direct rollover. It must be CA vs NC.

--
Alan
http://taxtopics.net

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- quote -

I should be more clear. Yes, under the new provision the
trustee to trustee transfer is legally called a rollover.
So by law it is a rollover. What I am apparently failing to
get across is that the common usage of the term rollover is
not in the context of a trustee to trustee transfer. See
408(d)(3):

(3) Rollover Contribution
An amount is described in this paragraph as a rollover
contribution if it meets the requirements of subparagraphs
(A) and (B). (A) In General
Paragraph (1) does not apply to any amount paid or
distributed out of an individual retirement account or
individual retirement annuity to the individual for whose
benefit the account or annuity is maintained if--
(i) the entire amount received (including money and any
other property) is paid into an individual retirement
account or individual retirement annuity (other than an
endowment contract) for the benefit of such individual not
later than the 60th day after the day on which he receives
the payment or distribution;or
(ii) the entire amount received (including money and any
other property) is paid into an eligible retirement plan for
the benefit of such individual not later than the 60th day
after the date on which the payment or distribution is
received, except that the maximum amount which may be paid
into such plan may not exceed the portion of the amount
received which is includible in gross income (determined
without regard to this paragraph).

I think this is how most people see a rollover. Please note
that I realize that 401(a)(31) has called a trustee to
trustee transfer a rollover for some time.

--
Drew Edmundson, CPA
Cary, NC

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- quote -

You need to read the IRC. A trustee to trustee transfer is
a direct rollover.

--
Alan
http://taxtopics.net

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

- quote -

That is the problem. A rollover is not a trustee to trustee
transfer in taxpayers' minds nor is it the traditional tax
professional definition. A rollover is when the taxpayer
receives the funds and then deposits them/rolls them over
into a new plan. A trustee to trustee transfer is when one
trustee sends the money to another trustee without the
taxpayer ever having possession of the money.

I have no problem with the provision, just the name of the
provision.

--
Drew Edmundson, CPA
Cary, NC

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- quote -

In actuality, it was thought through as they were dealing
with an IRA of a decedent. The trustee to trustee transfer
was one way to ensure that the rollover to a nonspouse
beneficiary IRA was not screwed up.

--
Alan
http://taxtopics.net

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

- quote -

You don't often see the words "Congress" and "think" is the
same sentence. <g
This is also an example of what happens when Congress
"allows" something but does not "require" it.

--
-Ernie-

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"A.G. Kalman" <agkdisposable-mtm2[at]yahoo.com> wrote:

- quote -

Thanks. I had totally missed the fact that the direct
transfer was "hard wired" in the Code.

--
Phil Marti
Clarksburg, MD

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- quote -

A perfect example of Congress not thinking before they pass
a law. Calling a "trustee to trustee transfer" a "rollover"
will just lead to confusion and taxpayer mistakes.

--
Drew Edmundson, CPA
Cary, NC

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- quote -

I don't see the relevance of your post. We are discussing
rollovers of inherited plans. Sec. 829 pf PPA '06
specifically states that only a direct trustee to trustee
transfer to a nonspouse beneficiary will be treated as a
direct rollover.

--
Alan
http://taxtopics.net

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote:

- quote -

Just an amplification here. While the plan doesn't have to
provide for a direct rollover, it can't stop an indirect
rollover. The difference is that the beneficiary would have
to come up with the 20% withheld for Federal taxes or incur
a taxable distribution.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"A.G. Kalman" <agkdisposable-mtm2[at]yahoo.com> wrote:

- quote -

Snip

Thanks for this. From a financial planning perspective
parents who wish to name non-spouse beneficiaries either as
primary or contingent beneficiary should check to see if
present custodian allows rollovers to non-spouses. Reason:
Custodian can change their philosophy on expenses - not to
mention make changes in fund philosophy - over time.

-HW "Skip" Weldon
Columbia, SC

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au109lee[at]yahoo.com wrote:

- quote -

I finally had a chance to read IRS Notice 2007-7 which has
guidance for PPA '06. Q&A 14 is on point and the answer is
that a plan does not have to offer this option.

Q-14. Is a plan required to offer a direct rollover of a
distribution to a nonspouse beneficiary pursuant to
402(c)(11)?

A-14. No. A plan is not required to offer a direct rollover
of a distribution to a nonspouse beneficiary. If a plan does
offer direct rollovers to nonspouse beneficiaries of some,
but not all, participants, such rollovers must be offered on
a nondiscriminatory basis because the opportunity to make a
direct rollover is a benefit, right, or feature that is
subject to =A7 401(a)(4). In the case of distributions from
a terminated defined contribution plan pursuant to 29 C.F.R.
2550.404a-3(d)(1)(ii), the plan will be considered to offer
direct rollovers pursuant to 402(c)(11) with respect to such
distributions without regard to plan terms.

--
Alan
http://taxtopics.net

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Phil Marti wrote:
- quote -

Barring any guidance to the contrary, I agree with Phil. The
code section only discusses distributions that take place
starting in 2007. However, I interpret that to mean the
first distribution from the decedent's IRA to the
beneficiary. If a taxpayer inherited an IRA and the
distribution from the decedent took place and you now have
an inherited IRA, any distribution in 2007 would not be an
inherited rollover.

--
Alan
http://taxtopics.net

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"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote:

- quote -

I haven't seen anything definitive about this, but,
borrowing from Mr. Justice Scalia, the "plain language" of
the statute says distributions in 2007 qualify.

--
Phil Marti
Clarksburg, MD

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- quote -

Many inherited IRA owners who inherited pre-2007 are locked
into high cost mutual fund choices from the present
Custodian. Does this new rule offer them the opportunity to
roll to another Custodian?

-HW "Skip" Weldon
Columbia, SC

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au109lee[at]yahoo.com wrote:

- quote -

Are you sure of the reason? PPA '06 allows for the
non-spouse beneficiary to perform a trustee to trustee
rollover starting 1/1/07. The IRS has not published
guidance as to whether a taxpayer who inherits a retirement
plan in 2006 but does not generate a distribution until 2007
qualifies for the new treatment. The text of the legislation
refers to the effective date being 2007 distributions.

The law allows the taxpayer to perform a rollover. There is
no practical reason for a plan not to perform the rollover
as it is no different than the mechanics of any other
rollover. However, until the plan can set up the necessary
process to initiate an "inherited" rollover and the trustee
receiving the distribution has a process in place to receive
an "inherited" rollover, you would have to wait.

--
Alan
http://taxtopics.net

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I am a non-spouse beneficiary of a 401k plan. My
understanding is that the Pension Protection Act of 2006
allows me to roll over the money into an inherited IRA.
However, when I tried to do this, I was told that I can't
because the Plan administrator has not authorized such
rollovers. The company administrating the plan refused to
tell me if, or when, I would be allowed to do a rollover,
and said I should just wait patiently. The Plan
administrator has not yet responded to my letter requesting
them to direct the company to process a rollover. Can
anyone tell me if the PPA grants me the legal right to such
a rollover or does it merely allow the plan to extend this
option to me if they have any interest whatsoever in helping
me?

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >