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Corrective Distribution


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Guest Giovanni
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An employee terminated in January 2006, took a distribution immediately and rolled over the distribution to an IRA. After completion of the 2005 ADP test, it was determined that the test failed and the Plan wants to make corrective distributions. Since this employee already took a distribution and rolled the money to an IRA, there is nothing left to distribute to him. What happens in this situation? Can the money be removed from the IRA? What are the tax consequences?

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