Plan administrator sent me my first annual 409A plan distribution a year too early

[RayJJohnsonJr]

I am a participant in a 409 A Plan and the plan administrator, Principal, sent me my first annual distribution last year, 2022, when I turned age 65. This year, 2023, they realized they they made a mistake and my first distribution was not to be until my age 66. I didn't know they had made a mistake until they called me and told me, and asked me to send the money back.

Then they sent me a registered letter saying my 2022 distribution was premature and and I therefore owe the 20% penalty plus interest on the penalty, but they would pay those costs for me. What nice people, huh?

It doesn't seem right to me. Shouldn't they fix their mistake? All I can find in my research is the possibility they could have filed a corrected 1099R.

Even if they're paying my penalty and interest, I I still don't like it.

[RayJJohnsonJr]

Test reply

[Lou S.]

I know next to nothing about 409A plans but it seems if they are paying the taxes and penalties on their mistake they are trying to "fix their mistake".

It seems like they should also pay any fees you have with your CPA if you need to file an amended return because of this, but that's something you probably need to take up with them.

[RayJJohnsonJr]

Thank you for your feedback Lou S.  I needed to hear a second opinion. Since I do my own taxes I guess I'll just let it go.