Okay, I have a slightly different issue. I had a 401K plan from April 2017 to November 2017. I left the company in November 2017 and rolled the 401K into a IRA in December of 2017. In March of 2018, I was informed the 401K plan failed the ADP plan and I had to have the Excess contribution and Earnings returned to me so the 401K plan could say it was now Okay to the IRS. My IRA company did return the funds to me and withheld a small amount for tax withholding that they sent to the IRS. Now my IRA company is trying issue the required 1099R to reflect this (the 401K plan can't do it). Even though I explained it all to IRA company at the time of withdrawal and again in 2019 when I disagreed with the 1099R they issued, they are saying the 1099R they issued is correct. I talked to the IRS on phone and they agreed with me. The Excess contribution was in a 401K plan and should be regulated as such. Publication 525 makes it very clear (in my opinion) that the "Excess contribution" ,Plus earnings on excess contribution through end of 2017 should be taxed as wages in the year the funds were distributed to me, not the year they were contributed.. So the Total and taxable distribution should be the same, and should be taxable in year 2018 (Code 8), and not marked as an IRA since the funds and excess were really from a 401K not and IRA (this allows the tax software to put in wages and not IRA distribution). The IRA company thinks the 1099R should show total distribution as what they removed, the taxable amount as only the calculated earnings, and as taxable in 2017 (Code P) and that it is an IRA distribution. While I sort of understand their position it came from IRA which it did from their account, I believe in this case they should be treating this simply as the IRA company being the agent for the 401K to return the funds since the 401K no longer has the funds to return to me. While I believe if I follow the 1099R as they issued it, I would pay less taxes, I don't think that is correct by IRS regulations and the facts in this case. If I file based on their current 1099R I could be liable for filling a false return. If I can't get them to change their 1099R, and I put it into my Tax Software as needed, I will trigger and audit because that does not match the IRA company filing, even though they are wrong. This is a rather unusual case of rolling over a 401K to an IRA before the Excess contributions caused by an ADP test failure issue has been resolved. I'm hoping someone out there has an opinion or experience with something like this. Any HELP!
