Excess Contributions

[Guest Joe Vasko]

For a refund of excess contributions that is made prior to March 15, 2003 (PYE: 12/31/2002) a 1099-R will be issued for the year distributed with a code P. This part is clear.

How is this reported on the individuals federal income tax return for 2002? I keeping reading that if the individual has already filed their tax return, then an amended return may be necessary. If so, when is this the case?

Thanks, Joe

[Guest Joe Vasko]

Go figure, a post to my own question...

It would seem that two (2) 1099-R's may be needed. The first, would be for the current year (2002) supporting the withholdings of the excess contribution. The second, would be for the year distributed (2003) coded 'P', which is not subject to Federal, Social Security, or Medicare taxes.

A correct answer would be greatly appreciated!!

[Disco Stu]

I agree with your first post, that if the individual has already filed their 2002 taxes, they will need to amend. They don't really need to wait until a year from now when they will receieve the 2003 1099-R. If the participant keeps some kind of documentation of the transaction, they can go ahead and do the amended return right away.

Your second post needs clarification. There is no need for two 1099-Rs in the situation you describe. Further, you cannot pay in federal withholding on distributions that are taxable in a prior tax year.