H.R. 10 Plan & Pension Plan to Trad IRA
I don’t come across HR 10 or Employee Pension Plans (which includes investment sub-accounts) often. The HR 10 account has a policy date of 1/1977 and the owner is not making contributions. The Pension Plan has 8/1965 as the Date of Entry but I’m unsure if there are any other participants or if any contributions are currently being made to the plan. The owner of both of these accounts turns 73 in September.
Is there anything to be aware or cautious of prior to rolling these accounts into a Trad IRA? Do these plans accept transfers or would we need to contact the carriers for their rollover requirements?
Permalink Submitted by Alan - IRA critic on Thu, 2024-02-08 20:22
I don’t keep current on such plans (Keoghs), but have heard that many of them were not properly restated over the years (currently a 6 year restatement interval applies). There has also been Form 5500 filing requirements if the balance exceeded 250k in recent years. Therefore, the first thing to verify with the plan custodian is if the plans have any past issues that were not resolved. The owner might be aware of any such issues. The DB plan may also fall under HR 10, as DB Keoghs were authorized prior to DC Keoghs, and there were likely combined contribution limits. Any rollover of a disqualified plan just creates more problems with excess IRA contributions. With respect to RMDs, age 73 is the first RMD year (assuming the owner is a >5% owner), therefore any 2024 RMDs would have to be distributed before a direct rollover.
Permalink Submitted by Paul Avegno on Fri, 2024-02-09 21:40
The balance of the HR 10 Keogh annuity is $115k, the Pension Plan’s account balance is $1.4M. What sort of “issues” might need to be resolved? How can we ensure neither of these are disqualified plans?