Lump Sum then rolled over w/in 60 days - 1099-R

[TPApril]

Lump sum distribution is taken, then rolled over.

Just curious about the 1099-R for the distribution. I'm thinking that it is marked as nontaxable (ie nontaxable amount = zero). Or alternatively is there a second 1099-R issued where it is rolled over (doesn't make sense to me but just trying to cover all bases)?

[Belgarath]

Not sure I understand the question. Was the lump sum distribution was paid directly to the former employee, with the check issued to the employee? If so, there was a taxable distribution with 20% mandatory withholding, and a 1099-R would be issued accordingly. There's no subsequent 1099-R when the individual then rolls to another IRA, or to another qualified plan. The participant would have to show the rollover on their individual tax return for the year in question.

I'm wondering if there s some additional detail that you can provide, if there's something else you are really asking?

[Bill Presson]

Agree with Belgarath. The 1099 is issued based on what transaction took place from the plan. What happens after that is irrelevant to the plan.

[Bird]

I'm guessing there was no WH but that's a different issue (and at this point nothing can be done about it). I agree with the others. What happened the moment it left the plan is what matters, not what happened later.

[david rigby]

Pardon me, but is there a concern about the original question?  The correct 1099 process should be very well-known at the TPA level.  Shouldn't it?

[C. B. Zeller]

If the TPA works mostly (or exclusively) with plans on daily investment platforms, they may have little to no need to deal with 1099-Rs, as those would be handled by the platform.

The TPA might be further insulated from the process if they utilize a service like Penchecks for distributions from non-platform plans.

[TPApril]

okay Belgarath - you're correct, not all the details are there.

Owner of 1-person plan took an allowed in service distribution.

Adviser has informed me that, including the 20% withholding, he has rolled it back into the plan.

david r - I never assume I know everything about a topic. In spite of my familiarity with 1099-R's, this situation has never come up with me (and I'm not excited about it either). They have asked me about their expected 1099-R. My asking about a second 1099-R didn't make sense since I've never seen one for a Rollover into a plan.

[pmacduff]

IMHO I think the plan would still prepare a 1099-R for the outgoing funds as a direct payment distribution (if that's how it went out).  It's up to the participant to report it properly and have the backup information when he files his personal tax return that he rolled it into a tax qualified vehicle within 60 days.  No matter that he rolled it back into the same plan, that just reports as an incoming rollover to the plan.  Again - this is just my opinion on how I would handle this situation.  It's ultimately a wash if it all happened in the same plan year but I believe the plan needs to show it as it happened.....

my two cents!