Corrective distributions on Schedule I

[Guest MAWalsh]

Should corrective distributions be posted on the Schedule I in the year they were actually paid (2002) or in the year of the excess contribution (2001)?

[JohnCheek]

I would report in 2001 if the 5500 is on the accrual basis, and in 2002 if the 5500 is on the cash basis.

[Disco Stu]

I would respectfully disagree with the previous post. In my opinion corrective distributions should be recorded on the 5500 in the year they acutally occur.

The instructions for Schedule I state...

"Include all distributions paid during the plan year...."

This doesn't appear to leave much room for accruing distributions that take place after the end of the plan year. If you compare this to the instructions for the contribution lines...

"Include the total cash contributions received and/or (for accrual basis plans) due to be received..."

Maybe the CPAs on the message boards will disagree, but from an accounting perspective, I'm not sure that corrective distributions could be correctly classified as a liability for the year to which they are attributable. For the most part it isn't possible to make the distributions until some point during the next year.