Deals & People December 24, 2014

USRP Acquires Pennsylvania 403(b) Provider

U.S. Retirement Partners (USRP) reported that it has acquired Kades-Margolis Corporation (KMC), which will join USRP’s national network of 403(b) providers.
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KMC, based in Wayne, Pennsylvania, provides 403(b) planning services to school district employees in Pennsylvania in K-12 education. The firm provides retirement planning and benefits services to members of the Pennsylvania State Education Association (PSEA), which has endorsed KMC for 40 years. More than 50 advisers throughout the state deliver services to more than 35,000 individual clients in nearly 500 school districts.

Randy Aranowitz, executive vice president of KMC, highlighted USRP’s practice management programs and tools as a service model benefit of the acquisition. “They will enable our advisers to become more productive, as well as deliver a higher level of service to their clients,” Aranowitz said in a statement.

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U.S. Retirement Partners, based in Iselin, New Jersey, provides employee benefits and retirement planning services, as well as tools and support to partner firms and advisers.

Compliance December 24, 2014

IRS Provides More Clarity on New Rollover Rule

The IRS has provided answers to questions received about the new single-distribution rule for rollovers from retirement plans.
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Internal Revenue Service (IRS) Notice 2014-54 provides that all disbursements from a retirement plan scheduled to be made at the same time are treated as a single distribution even if they are sent to multiple destinations. 

As a result, taxpayers with pre-tax and after-tax amounts in their plan, for example, can transfer through direct rollovers the pre-tax portion of the distribution (including earnings on after-tax amounts) to a traditional IRA and the after-tax portion of the distribution to a Roth IRA. Previously, transferring after-tax portions to a Roth IRA could only be accomplished through 60-day rollovers but not direct rollovers.

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The IRS has received questions following the issuance of Notice 2014-54, and recently announced answers to those questions.

Can I roll over just the after-tax amounts in my account to a Roth IRA and leave the remaining amounts in the plan (i.e., take a partial distribution of just the after-tax amounts)?

No. The guidance provided in Notice 2014-54 does not alter the requirement that each distribution from a plan must include a proportional share of the pre-tax and after-tax amounts in the account. Accordingly, any partial distribution from the plan must include some of the pre-tax amounts you have in your account—you cannot take a distribution of only the after-tax amounts and leave the pre-tax amounts in the plan. In order to roll over all of your after-tax contributions to a Roth IRA, you could take a distribution of the full amount (all pre-tax and after-tax amounts) in your account, roll over all the pre-tax amounts in a direct rollover to a traditional IRA or another eligible retirement plan, and roll over all the after-tax amounts in a direct rollover to a Roth IRA. 

I want to roll over my after-tax contributions to a Roth IRA and roll over earnings on my after-tax contributions to a traditional IRA. Can I do that?

Yes. Earnings associated with after-tax contributions are pre-tax amounts in your account. Thus, after-tax contributions can be rolled over to a Roth IRA without also including earnings. Under the guidance, all pre-tax amounts in a distribution may be rolled over to a traditional IRA and, in that case, will not be included in income until distributed from the IRA.

Additional information about the new rollover rules is available here.

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