1099-R for which year(s)?

[Guest BJW]

One of our plans in 2001 allowed deferrals in excess of the percentage imposed by the plan document (16% instead of 15% as stated in the plan) but this amount did not exceed the 402(g) limit. Now the plan administrator wants to refund the difference plus the earnings this year. We wanted to know if the employer must issue a 1099-R for this year and/or 2001 and if they must issue a new W-2 for 2001? Please help.

[kocak]

I don't think there is any guidance out there on this issue. Sometimes I use the correction method in EPCRS for deferrals made by an ineligible employee (operational failure). Instead of refunding though, we usually forfeit the deferral (using it to reduce future employer contributions) and we make the participant whole by having the employer "increase" their next paycheck.

mck