ERISA25 Posted September 13, 2012 Posted September 13, 2012 Administrator inadvertently distributed $150 out of participant's Roth 401(k) account. I am wondering whether the distribution should be reported on 1099-R and subject to premature distribution penalty (participant not eligible for qualified distribution)? I can't seem to find any exemption from the premature distribution penalty for this type of mistake. If the participant agrees to put the money back into plan, is it just a wash and there is no 1099-R reporting and no penalty?
BG5150 Posted September 13, 2012 Posted September 13, 2012 Was it done this year? QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
ERISA25 Posted September 14, 2012 Author Posted September 14, 2012 Was it done this year? Yes, it was inadvertently distributed in 2012
masteff Posted September 14, 2012 Posted September 14, 2012 Was money available in another source and did the participant otherwise qualify for an available distribution option? Which would make it a simple administrative/recordkeeping error that might be fixed in the back office? Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra
BG5150 Posted September 14, 2012 Posted September 14, 2012 Have the person pay it back. W/ interest. No harm, no foul. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
BG5150 Posted September 14, 2012 Posted September 14, 2012 Have the person pay it back. W/ interest. No harm, no foul. And have a procedure in place to help ensure it doesn't happen again. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
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