Excess Deferral Processed After 4/15

[DTH]

I'm just taking a poll.

A participant goes over the 402(g) limit in 2003 and the excess deferral is not distributed by 4/15/04. The individual will need to include the excess amount as income in the 2003 tax year by virtue of the amount reported on the individual's 2003 W-2. The excess deferral will be taxed again when it is actually distributed from the plan.

If the excess deferral is processed after 4/15 as a plan operational defect under EPCRS, the "excess deferral operational defect" distribution is tax reported in the year corrected. The correction was made on 12/15/04. The operation defect is tax reported on the 1099-R as taxable in 2004 (Code 8). The taxpayer should have also included the excess when they filed their 1040 for 2003.

Is anyone also tax reporting the excess deferral on a separate 1099-R as taxable in 2003? So in the tax year the operational defect is corrected the individual gets two 1099-Rs (1) operational defect excess deferral + earnings (Code 8) and (2) excess deferral contribution (Code P)?

Neither the 1099-R instructions nor Notices 89-32 or 88-33 require double tax reporting after the 4/15 deadline. I know of one organization that is doing this.

Thanks!!!