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SIMPLE IRA deposit error


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We recently discovered that a client who had a SIMPLE IRA previously sent the January 2017 contribution deposit in error to the SIMPLE plan instead of to the new 401(k) plan that was set up for 2017. However, the W-2's are correct and the funds were withheld as 401(k) deductions. Any ideas how to correct and remove contribution from SIMPLE IRA and transfer to the 401(k)? Don't think 1099-R is appropriate since tax reporting is correct on payroll side.

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The problem is always with getting the IRA custodian to do what ought to be done.  But the IRA custodian really has little choice under the rules. So, just have the IRA custodian do a direct transfer to the 401(k) plan.  Let them report it with a 1099R since it won't be taxable anyway. 

 

 

Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC
President
Qualified Plan Consultants, Inc.
46 Daggett Drive
West Springfield, MA 01089
413-736-2066
larrystarr@qpc-inc.com

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