legort69

In case you are interested to know how it played out, I took the road less traveled, went with the minority opinion, took the aggressive approach that is in line w/ GBurns: I rescinded the withdrawal and restored the account, deleted the 1099R, and am requesting the tax overpayment on the 945 to be returned. I do appreciate all of the responses and have learned a little along the way, but sometimes you have to look at the human aspect of it and I don't think this participant was financial prepared to deal with the tax/penalty consequences. The participant is also aware that there may be possible future tax/penalty issues if the IRS determines that what was done is invalid. Thanks ya'll!

I want to add that employee works at our TPA firm, which means I am so inclined to assist her with this situation. I was hoping to give her the "employee discount", or even a holiday benefit. The first 2 responses are very firm, but the most recent response shows some wiggle room. I would prefer to have her restore her account and adjust her 1099R rather than give her tax basis which needs to be tracked. Its all in the same tax year. Whats the exposure with that? We're suppposed to be dealing with a more compassionate, friendlly IRS. Happy holidays!

I have an employee who was laid off in 2003, took a distribution to herself in 2004 and was rehired in 2004 a few months after her withdrawal. My question is that she wants to not have to pay the 10% penalty and income on her withdrawal. She was not fully vested and can restore the ER portion of her match to retain her vesting. Is it also possible to reverse the distribution and restore the EE portion of her account and avoid including in income on the 2004 1099R? I still have to do the 1099R because we withheld 20%.

I prepare 5500s for large plans that have investments in insurance companies that only require limited scope audit. The plan also has another platform of mutual fund investments that would require full scope. How would one mark on the schedule H to indicate whether the auditor performed a limited or full scope audit? Also, what if a plan transferred their plan from an insurance company (limited scope) mid year to a registered investment company that required full scope for the latter part of the year. An auditor does not know what kind of opinion to write ( i would guess a split opinion). Moreover, how do I mark the opinion on the 5500? Thanx