MRD - 1099R for 2002 or 2003?

[Guest RONNIE WASEL]

Plan has a participant that gets annual MRD. Participant is still actively working with the employer.

MRD was calculated and transmitted to Employer to have withdrawn from investment accounts. Monies were distributed from the investment company on 12/31/2002, but participant did not receive the monies until 1/3/03.

Questions, does the participant get assessed the MRD penalties even though she still works and/or the monies were out of the plan by the end of the year?

Also, does she receive a 1099R for 2002, even though she did not receive the monies until 2003?

Thanks.

[Appleby]

The distribution was done in time, therefore there will be no penalties ( excess accumulation penalties).

The assets are considered distributed when the check is issued. This means that this is a 2002 transaction for tax reporting purposes.