Issues 2 1099-R's for same loan default in 2 different years

[TPAVP]

In 1999 a participant terminated and defaulted on his loan. A 1999 1099-R was issued to him reporting the loan default. In 2000 the participant was paid out and two 1099's were issued to him. One for the Rollover and one for the loan default (again).

The participant filed their 2000 tax return based on this information. How is the incorrect 1099-R corrected for the loan default that got 1099ed twice?? Does he need to refile his 2000 tax return???

[Fredman]

I've seen this corrected by issuing the participant a corrected 1099-R with zeros on it (use the same distribution code) for the loan default. It would also be a good idea to send a copy of the rollover 1099-R along with a letter of explanation. This can be very confusing to participants and the more info you give them the better. The participant will need to file an amended 2000 tax return.

Don't forget to send the corrected 1099-R info to the IRS.