1099R Issue

[Guest Powers]

We have a client who provided us incorrect census information on an ineligible participant. This information allowed the participant to erroneously enter the plan and defer. When it was discovered, there was a distribution made from the plan to the participant, and we are not sure how to 1099R the participant.

I am of the mindset that we should not have distributed the $$ as we did, but stated a Mistake of Fact and had this handles through payroll. Of course it is too late for that course of action, so I am not sure what code to use if we 1099 the ineligible participant.

Any recommendations or suggestions would be greatly appreciated.

[Jim Chad]

Code 8 is the closest thing I see.

[WDIK]

FYI

http://benefitslink.com/boards/index.php?showtopic=32190

[QDROphile]

You may wish to explore in greater detail what "mistake of fact" means to the IRS. It is a limited concept.