BG5150 Posted October 3, 2006 Posted October 3, 2006 I have a client which terminated it's plan in 2005. I was getting ready to do the final 5500 when I noticed on my trust report a blance of 300 bucks. I found out it was a loan that was never deemed when the participant cashed out in '05. Am I going to have to do a form for '06? I really was just a processing mistake. All the other assets were distributed on or before 12/31. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
BG5150 Posted October 9, 2006 Author Posted October 9, 2006 Anyone? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Bird Posted October 9, 2006 Posted October 9, 2006 So a 1099-R wasn't issued? Seems to me the proper way to handle it is: Issue a 2005 1099-R now, be prepared to pay late fees for the filing (I think it's $50 per return after Aug 1 so this is not a biggie), make the participant miserable because s/he'll have to file an amended 1040, and file a final 5500 showing all assets distributed. I don't know if there's a more formal self-correction for failing to deem a loan distributed but this seems to correct it. Other things you could consider, but which wouldn't be "right" for various reasons: Deem the loan distributed in 2006 (i.e. file a 1099) and file a final 5500 in 2006. Deem the loan distributed in 2006 and file a final 5500 for 2005, ignoring the obvious discrepancy. (I might be tempted to do this.) Don't issue a 1009 at all and just file a final 5500 for 2005. Ed Snyder
QDROphile Posted October 9, 2006 Posted October 9, 2006 You might get somewhere by considering whether the distribution was a deemed distribution or an offset distribution -- which is an actual distribution. I suspect it was an offset distribution that ocurred in 2005 and the paperwork simply was not done properly at the time. You still have Form 1099 questions, but probably not a Form 5500 problem. Someone may have to think about whether or not the distribution was rollable and if the plan complied with applicable rules relating to the distribution. If anyone cares.
Bird Posted October 10, 2006 Posted October 10, 2006 QDROphile makes a good point, it's probably an offset and not a deemed distribution. So it happened in 2005 and wasn't reported. So you file a final 5500 for 2005 and decide separately how or whether to take care of the distribution reporting problem. Ed Snyder
BG5150 Posted October 10, 2006 Author Posted October 10, 2006 The plan terminated. When the record keeper processed her distribtuion, it failed to properly offset the loan QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now