KaJay

@david rigby I agree with your last statement! The 403(b) rollover request paperwork of the receiving firm explicitly states RMDs are not eligible for rollover and the participant acknowledges he/she must inform the sending firm it cannot include the RMD. While this appears to be a good faith effort of the receiving plan, likely to avoid a correction like this, one would imagine the 401k provider should "know better".

@CuseFan Thanks for your quick reply. The plan decided to do just that. The checks will be returned to the sending firm.

A 403(b) plan received two rollover checks from a 401(k) on behalf of a participant age 74. Check #1: Pre-tax deferrals ($4,915) Check #2: Non-Qualified Roth basis ($10,447) with earnings ($590) [First Roth contribution = 2024] The 403(b) was informed that the participant's 2025 RMD for the 401(k) was not distributed to him prior to the rollover. The participant is not eligible to make regular contributions to the 403(b). The 403(b) has not cashed the checks yet because it does not want to deposit ineligible amounts. It is wondering if it can return the checks to the 401(k). What is the cleanest way to correct this?

@David D @Artie M Thank you both for your responses and additional research. It is greatly appreciated!

@David D He had taxable income of $2,633. The $10,000 is an "up to" annual limit. The lifetime limit is $40,000.

@Artie M Q1 - If the excess amount plus earnings will not be distributed until the participant becomes eligible at some unknown time in the future, is the plan required (or is it a best practice) to reclassify the excess Roth amounts as pre-tax within the plan now? If not, it seems like it could be administratively messy. Q2 - I understand that we are not to send the excess plus earnings back to the participant without a distributable event. a. Does this mean we let the funds stay in the plan indefinitely? b. What does fixing this 2024 deferral excess look like operationally from start to finish? Meaning, other than recoding the Roth as Pretax now, is there anything special that occurs? It would seem that when the funds are distributed in the future, it will just look like a regular distribution. c. If the funds were pre-tax to start, what would change operationally?

@David D The participant is a minister with designated clergy housing allowance. His housing allowance for 2024 was $8,400.

@RatherBeGolfing The deferrals did not exceed the $23,000 limit. Since my earlier post, we have a bit more information related to his contributions: 2024 Total EmployER [non-matching] contributions: $5,520 2024 Total EmployEE Roth contributions: $5,520 2024 Total Taxable [includible] Income: $2,633 It has been decided that the special employER contribution limit [IRC Section 415(c)(7)], that allows the employer to contribute up to $10,000 beyond includible compensation, will be applied to help reduce the excess. Below is what I think may need to occur to ultimately establish the extent (and type) of excess: 1. First we apply the employEE contributions received up to the includible compensation limit ($2,633). a. This means the 2024 employEE contributions are in excess of $2,887 (plus any earnings related to that amount) 2. Second, the special limit allows for employER contributions (up to $10,000) even though the includible compensation was used up by the employEE contributions. a. We can apply this special limit to 100% of the employER contributions that came into the plan in 2024 ($5,520). b. Because the employER contributions are not in excess, the excess is limited to a 402(g) excess. Questions related to quote above (any reference to the IRC is appreciated!): Q1: Is the delay in distributing the excess deferrals based on it being after April 15? Q2: For excesses that are not distributed prior to 4/15, does the participant simply get a 1099R for 2024, taxing him on the excess plus earnings, but the deferrals actually stay in the plan until he requests them (and has a distributable event)?

Plan Type: 403(b)(9) Non-electing Church Plan Background: Participant (under age 59.5) contacted the plan in May 2025 because his tax professional told him he did not have enough includible compensation to support the amount of Designated Roth 403(b) deferrals he made in 2024. For purposes of my question, he only made Roth deferrals to the plan and these excess deferrals totaled $5000, and there were $100 in earnings on that excess. Questions: Since the distribution will occur after April 15, 2025, there is some confusion as to how it is to be reported on the 2025 1099R. IRC § 402A(d)(3) seems to instruct the payer to tax the participant on the full distribution, not just the earnings portion, when distributed after April 15 (which seems counter intuitive). IRC § 402A(d)(3) states the following: (3) Treatment of distributions of certain excess deferrals Notwithstanding section 72, if any excess deferral under section 402(g)(2) attributable to a designated Roth contribution is not distributed on or before the 1st April 15 following the close of the taxable year in which such excess deferral is made, the amount of such excess deferral shall— (A) not be treated as investment in the contract, and (B) be included in gross income for the taxable year in which such excess is distributed. Q1: Referring to the highlighted text, does this mean that the 1099R should be written as follows: Box 1: $5100 Box 2a: $5100 Box 5: (blank) Box 7: 1, 8 (assuming no known exception to early distribution) Q2: Does withholding apply to this distribution? (I think not) As always, thanks in advance for your responses!

Thank you!

Happy Friday, everyone. I am wondering if any of you have some insight on reporting after-tax (non-Roth) distributions vs. Roth distributions. We have an individual taking a distribution of his after-tax (non-Roth) money. There are questions as to how reporting this transaction is different than reporting a Roth distribution. The main question comes down to which distribution code(s) the payer is to use in box 7. For a [qualified] Roth distribution, the payer indicates: the full distribution amount in box 1; $0.00 in box 2a; the Roth contribution (basis) amount in box 5, and code "7B" for box 7 year of first Roth contribution in box 11 This is what has been proposed for the After-tax (non-Roth) 1099-R: the full distribution amount in box 1; taxable earnings portion in box 2a; the after-tax (non-Roth) contribution (basis) amount in box 5, and code "7" in box 7 Anyone know if this is correct?

Well, for those of you wondering, I found the answer on page 7, first column, last paragraph, of 2025 Pub 15-T: "If a payee received their first periodic pension or annuity payment before 2022 and had failed to furnish a Form W-4P when those payments began, you must continue to withhold on those periodic payments as if the recipient were married claiming three withholding allowances on a Form W-4P for 2021 or earlier, unless the payee furnishes a Form W-4P requesting a change in withholding.

I was reviewing Form W-4P to determine if the payer is to withhold differently for annuities that started, for example, in 2017 vs. 2025 when there is no W-4P on file. 2025 Form W-4P states: "If you don’t give Form W-4P to your payer..., then the payer will withhold tax from your payments as if your filing status is single with no adjustments in Steps 2 through 4. For payments that began before 2025, your current withholding election (or your default rate) remains in effect unless you submit a new Form W-4P. Client A, who annuitized in 2017 and never submitted a withholding certificate, had an original "default withholding rate" of "married with 3 allowances". Client B, who annuitized in 2025 and has not submitted a withholding certificate, has a default withholding rate of "single with no adjustments". Am I understanding correctly that in 2025, in the continued absence of a Form W-4P, Client A's default withholding remains "married with 3 allowances"? We just want to know if in the absence of a W-4P, whether or not Client A's withholding must conform to the newer default of "single with no adjustments" or if it remains with the original default of "married with 3 allowances". TIA

Thanks for the confirmation!

An employer (church) has two employees. One employee participates in a 403(b)(9) non-electing church plan, the other employee is contributing to a SIMPLE IRA. Is this okay? I was under the impression an employer cannot have both of these in operation at the same time.