Reporting of excess contribution

[Guest alcharles]

I have received a new 1099R from my former employer to correct an excess contribution to my 401K, which was directly rolled over in 1999. The excess was coded 8, which is then income to me in 1999. Upon notifying my brokerage firm of the need to make the correction, they too will file a 1099R for 2000 and classify the excess as code 8.

I should not have to pay federal income tax twice so which of the two (employer or brokerage firm) is incorrect in their coding? What should the code be? Thank you.

[Fredman]

The brokerage firm should not send you any 1099. They should recognize that the excess contribution was not eligible for rollover and distribute the $$ with no tax reporting. They may not be willing do this for you so be prepared to defend yourself on your tax return.

You should also receive a corrected 1099 on the amount rolled over. The two 1099s added together should equal the amount of the original distribution.

[This message has been edited by Fredman (edited 04-07-2000).]

[Earl]

a solution might be to have the IRA send the money back to the plan, having the plan say the money was not due you. then the plan could make the distribution and correctly report it.

But if you already got the money....