ADP refund without 1099-R

[Guest ladycpa2]

An HCE received a refund for failed ADP for 2007 within the 2 1/2 months. It is taxable for 2007 but the plan is not issuing a 1099-R since they've already filed those by 1/31. The problem is how to report on the individual's 1040. Without a 1099-R, does it go on lines 16a and 16b or should they report on Line 7. According to the 1040 instructions, it should be included on line 7, not on line 16a. Unfortunately, I don't think that the client can electronically file to get his refund sooner since we don't have a 1099-R.

Any thoughts?

[pmacduff]

Report it as you would if you had the 1099-R form. This was a convoluted system that the gov. came up with many years ago and we TPAs have been dealing with ever since!

The 1099-R does not need to be filed with the return so when the participant receives the actual form next January it will be coded with a "P" (for previous, meaning taxable in 2007). That form should be kept with the participants 2007 tax return.

Hope this helps.

Thankfully this procedure is going away under the new regulations!

[Jean]

The individual reports the amount received on line 7. And, per the 1040 Tip on instructions page 22, "Attach Form(s) 1099-R to Form 1040 if any federal income tax was withheld."

Generally, the individual should receive a letter of explanation as to what the distribution is for and the year it is taxable. The letter should also explain that they will receive the 1099R next year and to keep it with their 2007 tax files.

[401_4_ever]

Alernatively, the Participant can ignore the distribution, and when they get the 1099-R (In January of 2009), they would have to amend their 2007 return.