john resigned from his job and became in independent contractor. his previous em
ID: 2782344 • Letter: J
Question
john resigned from his job and became in independent contractor. his previous employment and the duties he now performs for the former employer are substantially before he resigned. he has received a distribution from his employer's retirement plan, distribution qualifies as an LSD, which of the following is least likely to be of concern.
a. whether he has satisfied the seperation from service rule
b. whether is has satisdied the severance of e,mployment rules
c. whether he is doing the same job he did when he was employed
d. whether the distribution was from a qualified plan
Explanation / Answer
Least likely to be of concern to the tax authorities would be option C- whether he is doing the same job he did when he was employed.
Explaination-
IRS should be concerned about
1.whether the distribution was from a Qualified retirement plan (as contributions to the scheme are tax free till withdrawal),
2. Whether he has satisfied the separation from service rules (as receivng the distribution during first 5 years of participation in the plan are disqualified distributions)
Whereas, it is not concerned about whether the employee concerned is doing the same job as he did during his employment.
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