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Showing results for tags '401(k) refund after rollover'.
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We have an issue with a particpant who is due a 401(k) refund for the 2012 plan year (nondiscrimination failure). He retired in 2012 and rolled his money over to an IRA during 2012. So, the refund is being issued from the IRA in 2013 before April 15th. Is this taxable as a 2012 distribution becuase post circumstance have made it ineligible for rollover? Or is it taxable in 2013 becasue is is now deemed ineleigble for a rollover and must be a distributed by April 15th to avoid penalty taxes? It make sense to see it one way as the 2012 situation. However, it seems unfair and impractical to come to that solution. Since, a participant who still has money in the plan would get to declare it as 2013 income in this situation it should be the same for the seperated participant who rolled over his money. This solution makes the situation a lot easier to deal with administratively, tax wise, and a level playing feild with others whom must recieve corrective distributions. Which one is right?
