IRA one-rollover-per-year rule. Another reason for Solo 401k

You generally cannot make more than one rollover from the same IRA within a 1-year period. You also cannot make a rollover during this 1-year period from the IRA to which the distribution was rolled over.

Beginning after January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own.

The one-per year limit does not apply to:

• rollovers from traditional IRAs to Roth IRAs (conversions)
• trustee-to-trustee transfers to another IRA
• IRA-to-plan rollovers
• plan-to-IRA rollovers
• plan-to-plan rollovers

Once this rule takes effect, the tax consequences are:

• you must include in gross income any previously untaxed amounts distributed from an IRA if you made an IRA-to-IRA rollover (other than a rollover from a traditional IRA to a Roth IRA) in the preceding 12 months, and
• you may be subject to the 10% early withdrawal tax on the amount you include in gross income.

You can still roll several traditional IRAs into a Solo 401k plan without penalty. Maybe now is the time to Roll your IRAs over.

Solo 401k plan:Your Opportunity for Checkbook control of your future

IRAs Attacked by Supreme Court.Court Rules Against!

Solo 401k

On June 12th, The U.S. Supreme Court  

ruled that inherited IRAs are not protected from creditors in bankruptcy. In a unanimous opinion, the Supreme court court held that an IRA inherited by someone other than a spouse cannot be considered a retirement fund, because the IRA's beneficiary cannot invest further money and must take distributions within a set number of years.

"Nothing about the inherited IRA’s legal characteristics would prevent (or even discourage) the individual from using the entire balance of the account on a vacation home or sports car immediately after her bankruptcy proceedings are complete," the ruling said.

This is just another reason to use a Solo-k as your retirement vehicle instead of an IRA. If you have an IRA, now,may be the time you should convert.

Solo 401k plan:Your Opportunity for Checkbook control of your future

Made an Indirect IRA Rollover Reporting Mistake?

Solo 401k

There are several options available to respond to the IRS changes to a tax return for an unreported IRA indirect rollover. IRS changes with a $6978 penalty and $1541 interest charges

1. Provide a statement, as part of your response, that an indirect rollover was made, within the 60 day period, to the Solo 401k plan. Provide copies of the Solo 401k bank statement reflecting the deposit and the Solo-k name on the account.

2. Prepare an amended return on 1040X writing "CP2000" on the top of the form. Include the amended return with your response. On the amended return fill in box 15a with the amount of the indirect rollover, and in box 15b write “$0 ROLLOVER”. (If your accountant has any questions about this, please refer them to page 24 of the IRS’s 2012 1040 Instructions. or see Publication 575)

3. Although it is not necessary to file a 5500EZ for a Solo 401(k) that has less than $250k of assets, a plan holder may file if he wishes. This would be a possible way to advise the IRS of the indirect rollover.  Simply fill in the amount of the indirect rollover in box 8 C and the IRS will cross reference this with the 1099R. Thus no taxes will be due. Include a copy of the filing with your response to the letter. Currently the IRS is allowing filing of prior years' 5500EZs without penalty.

Solo 401k plan:Your Opportunity for Checkbook control of your future

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Target Date Funds under Dept of Labor Scrutiny

SOLO 401k

The Department of Labor is proposing to amend its qualified default investment alternative regulation (29 CFR 2550.404c-5) and participant-level fee disclosure regulation (29 CFR 2550.404a-5).1.

In particular, the proposal would require a rationalization of the TARGET DATE FUNDS’s asset allocation, how the asset allocation will change over time (the TARGET DATE FUNDS’s “glide path”), and the date when the TARGET DATE FUNDS will reach its asset allocation zenith; including a chart, table, or other chart representation demonstrating the changes in asset allocation. 

The proposal also would require information about the significance of the TARGET DATE FUNDS’s “target date;” including any hypothesis about participants’ contribution and withdrawal intentions following the target date. 

Additionally a disclosure statement that TARGET DATE FUNDSs do not guarantee sufficient retirement income and that participants may lose money by investing in the TARGET DATE FUNDS, including losses both before  and after retirement.

Plan participants would benefit from any additional information concerning these investments.

Solo 401k plan:Your Opportunity for Checkbook control of your future

Unwise Real Estate Investments Sends Investor to Poor House

solo 401k

A Dept.of Labor  Consent judgement against Georgetown Realty Inc.the company's owner, John Mahaffy,resulted in restitution of $420,127 to the Georgetown Realty Inc. Profit Sharing Plan and Trust for losses due to unwise real estate investments overseen by Mahaffy. In addition, Mahaffy is barred from serving any employee benefit plan covered under the Employee Retirement Income Security Act.

Mahaffy used 80% of the plan's assets to invest in purchasing property for a resort. The resort failed and the lenders foreclosed. The plan participants lost most of their retirement accounts

The DOL filed a lawsuit, Perez v. Georgetown Realty Inc. (civil action number 3:12-cv-01164), in the U.S. District Court for the District of Oregon.


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Solo 401k Plan: Your Opportunity for Checkbook Control of Your Future