Taxation of Distributions for American Indians

[Guest AOlson]

We have a pariticipant in one of the 401(k) plans that we are recordkeeping who is an American Indian and lives on a reservation. She works in the "general public" and participates in her employer's qualified 401(k) plan . The plan sponsor is asking us if she would get a 1099 when she takes a distribution or if there other requirements that we will need to meet to appropriately report this to the IRS?

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AOlson

[jlf]

Distributions generate a 1099. If she elects to directly rollover an eligible rollover distribution to a qualified plan she will defer her tax liability until such time as she withdraws her money. A 1099 will still be generated but it will be coded as a "direct rollover distribution"; a non-taxable event.

Her ethnic heritage and place of residence are not factors.

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[Guest AOlson]

Thanks JLF. The plan sponsor seemed to think that this person was exempt from the 20% withholding or had different tax implications than anyone else. Thanks for your answer.

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AOlson