Excess Deferrals - Statute of Limitations

[bzorc]

A participant in a 403(b) plan has been notified that they have had excess deferrals made to their account for years dating all the way back to 1998. The plan has entered into an agreement with the IRS, and now each affected participant is receving a distribution in 2014 for the amount of the accumulated excess, plus applicable earnings on the account. Each participant is being advised to properly report the distributions in the appropriate tax year affected by the excess deferrals.

The question here is whether this participant, who had excess deferrals in 1998 (and beyond), must amend personal returns for tax years in which the statute of limitations has been met, or only for tax years that are still open to examination.

Thanks for any replies.

[Carol V. Calhoun]

Unless the participant has made his or her own agreement to the contrary with the IRS, the IRS has no authority to go beyond the statute of limitations. So the fact that the employer is required to report the distributions does not impose any corresponding duty on the part of the participant to report them for closed years.