KaJay

In a 403(b) plan, we have a participant that exceeded the 2018 402(g) limit by $84. Since the time of the deposit, he has had a loss of $3 on the $84. There is some confusion as to what we send back to him and what is reported on 1099-R. Do we issue a check for $81 and report $81 on the 1099-R? Do we send him $81 and report $84 on the 1099-R? Do we issue a check for $84 and report $84 on the 1099-R since that is the amount he exceeded the limit by? Or something else? TIA for your comments.

Thank you!

Background: A Canadian citizen, living in Canada, has elected to start an annuity from his US based 403(b). He has requested that the monthly payment be sent to his bank account in the US, rather than be mailed to his home address in Canada. Questions: 1) Can the 403(b) plan treat the payments as though they were sent to a US person because the bank is located in the US and consequently apply withholding as though he is a US person? 2) If the payments were being sent to a residential address in the US for the same individual, does that change how we apply withholding? 3) If the answer to one of the above is that we can apply withholding as though he is a US person (married w/3 allowances), do the distributions get reported on a 1099-R or a 1042-S? Thanks for your help!