Two 1099 Rs for the same amount

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I had a Fidelity 401k. At the end of my employment I rolled it over to a Fidelity IRA and then to a Schwab IRA. Then Fidelity sent a letter saying my company failed the Actual Deferral Percentage Test ("ADP Test"). As a result I had excess contributions. Fidelity could not take out the excess since the funds were now with Schwab. I took the excess contribution out from the Schwab IRA. Now both Schwab and Fidelity have issued a 1099 R (taxable) for the same amount. Fidelity never distributed any money. They are just being cautious. Fidelity refuses to issue a corrected 1099 R. How do I deal with this?

Brasher Excess Fidelity Rollover 032714.pdf

[Lou S.]

Claim one on your tax return. Keep really detailed records of everything that happened in case you get audited so you can explain to the IRS that Fidelity issued the 1099-R in error since the funds came form Schwab who issued a correct 1099-R.

I'd probably also send a formal letter to Fidelity requesting they issue a corrected 1099-R, they may or may not do so but having the letter in your files would bolster your case should the IRS raise questions.

[Lou S.]

And probably get some advice from your CPA who may or may not have run into this situation before. While the failed ADP test after rollover is somewhat common I don't think the rollover then transfer to new IRA is that common in this situation so he may or may not have seen it before.

[Bird]

Fidelity actually did the right thing - after the fact, they realized that some of the distribution that was rolled over was not eligible for rollover, so they told you about it, and issued two 1099-Rs, one for the non-taxable rollover and one for the portion that was not eligible for rollover, and therefore taxable. When you took the money out from the Schwab IRA, it was a distribution of an ineligible contribution, i.e. an excess contribution. If you told them that, it should have been coded differently; I can't remember the code off the top of my head.

At this point, just report one, keep your records, and be prepared to explain it all.

[Appleby]

I agree with Bird. The 1099-R from Schwab should show the amount as a nontaxable distribution, if done properly and timely ( Code P or 8 in Box 7, to let the IRS and other interested parties know that it is a correction of an excess contribution. If there were net attributable income (NIA) earnings, only that amount would be taxable.

[Appleby]

To add...the FIdelity 1099-Rs should be for the 401(k) account...not for the Fidelity IRA.