SonnyDMB wrote: ↑Wed Dec 06, 2017 12:19 am
SJR, I went thru the same process with my tax guy. Page 17 in publication 575 is what got me comfortable
https://www.irs.gov/pub/irs-pdf/p575.pdf
Key Excerpt:
Defined contribution plan. A defined contribution plan is a plan in which you have an individual account. Your benefits are based only on the amount contributed to the account and the income, gains or losses, etc., which may be allocated to that account. Under a defined contribution plan, your contributions (and income allocable to those contributions) may be treated as a separate contract for figuring the taxable part of any distribution. The employer contributions (and income allocable to those contribu- tions) wouldn't be considered part of that separate con- tract.
Example. Ryan participates in a defined contribution plan that treats employee contributions and earnings allo- cable to them as a separate contract. He received a non-annuity distribution of $5,000 before his annuity start- ing date. He had made after-tax contributions of $10,000. The earnings allocable to his contributions were $2,500. His employer also contributed $10,000. The earnings allo- cable to the employer contributions were $2,500.
To determine the tax-free amount of Ryan's distribu- tion, use the same formula shown above. However, be- cause employee contributions are treated as a separate contract, the account balance would be the total of Ryan's contributions and allocable earnings.
Thus the tax-free amount would be $5,000 × ($10,000 ÷ $12,500) = $4,000. The taxable amount would be $1,000 ($5,000 － $4,000).
If the employee contributions weren't treated as a sepa- rate contract, the tax-free amount would be $2,000 ($5,000 × ($10,000 ÷ $25,000)) and the taxable amount would be $3,000 ($5,000 － $2,000).
Note: Employee contribution is the after-tax voluntary contributions. Elective deferrals are actually employer contributions (elected by the participant/employee and contributed by the employer)
http://fairmark.com/retirement/roth-acc ... treatment/
Hope this helps.
This is huge. Thank you very much. Would have taken me many more hours to have found this, assuming I'd have found it at all.
This would seem to allow irr or rollover to rIRA.
I think that all the bases have been covered at this point.
Until now the best I had was this section of: Ruling 2004-12.
The rules restricting the timing of distributions, other than those relating to required
minimum distributions under § 401(a)(9), generally apply to employer contributions made
to the plan or annuity. For example, §§ 401(k)(2)(B) and 403(b)(11) prohibit the
distribution of employer contributions that are elective deferrals (within the meaning of
§ 402(g)(3)) prior to the occurrence of certain events. Section 403(b)(7)(A)(ii) provides
that employer contributions to custodial accounts treated as § 403(b) tax-sheltered
annuities may not be distributed prior to the occurrence of certain events. Section
457(d)(1)(A) provides generally that an eligible plan meets the distribution requirements of
§ 457(d) if under the plan amounts will not be made available to participants or
beneficiaries earlier than the calendar year in which the participant attains age 70 1/2 or
when the participant has a severance from employment. Similarly, regulations under
§ 401 provide general rules regarding the timing of distributions of employer contributions
to pension, profit-sharing and stock bonus plans (see § 1.401-1(b)(1)(i), (ii) and (iii)). Thus,
§ 1.401-1(b)(1)(i) provides that a pension plan is a plan established and maintained by an
employer primarily to provide systematically for the payment of definitely determinable
benefits to employees over a period of years, usually for life, after retirement. The Service
has interpreted this to mean that employer contributions to a pension plan may not be
distributed prior to retirement, death, disability or other severance from employment, or
termination of the plan.
Rev. Rul. 69-277, 1969-1 C.B. 116, and Rev. Rul. 94-76, 1994-2 C.B. 46, address
distributions of other types of contributions. Rev. Rul. 69-277 provides that a pension plan
may permit distribution to an employee of amounts attributable to the employee's after-tax
contributions prior to the employee's termination of employment. Rev. Rul. 94-76 provides
that a profit-sharing plan may permit the immediate distribution of amounts attributable to a
rollover.
In essence I was extrapolating that if elective deferrals are only able to be accessed at certain times, while employee after-tax contributions don't have those restrictions, then the pro rata rule would not apply provided that those circumstances aren't present.
