Services

Employee Benefits and IRAs

The firm provides legal advice to individuals, estates, and beneficiaries with tax issues concerning employee benefits and individual retirement accounts (IRAs). Representative matters which we handle include:

Failure to Make Required Minimum Distributions

Individuals who have failed to make minimum required distributions and are facing a 50% excise tax under on the amount not distributed as required.  IRC § 4974(a), (d).  The IRS can waive part or all this tax if a taxpayer can show that any shortfall in the amount of distributions was due to reasonable error and the taxpayer is taking reasonable steps to remedy the shortfall.  The IRS requires a Form 5329 and reasonable cause statement. See IRC §4974(d); Treas. Reg. §54.4974-2, Q&A 7(a); Proposed Treas. Reg. §54.4974-1; Instructions for Form 5329 (Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, p. 8 (2020)).

Qualified Retirement Plan Rollover – 60-Day Rule

Individuals who are facing the 10% additional tax on early distributions and are seeking a waiver of the 60-day roller requirement.

Generally, a rollover is a tax-free distribution of assets from one qualified retirement plan that is reinvested in another plan or the same plan.  Generally, you must complete the rollover within 60 days of receiving the distribution.  Any taxable amount not rolled over must be included in income and may be subject to the 10% additional tax on early distributions.  See Instructions for Form 5329 (Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, p. 2 (2020))

Under Rev. Proc. 2016-47 in Internal Revenue Bulletin 2016-37, you may make a written certification to a plan administrator or an IRA trustee that you missed the 60-day rollover contribution deadline because of one or more of the 11 reasons listed in Rev. Proc. 2016-47.

Self-Directed IRA and Prohibited Transactions

Individuals who have established a self-directed IRA for purposes of holding other investments, such as real estate, and are facing compliance issues.  Those issues may include failure to obtain a custodian to administer the account, not having legal title to the investment assets held in the name of a qualified IRA custodian, and commingling of personal and retirement funds.  The IRS imposes a tax on prohibited transactions and may also impose penalties.  See IRC §4975.