Return of excess deferral... Prepare a 1099-R for 2025?

[Basically]

A Solo 401(k) guy reached out to me.  He deferred $4100 too much.  He is pulling it out with earnings by 4/15.  Does he get a 2025 1099-R for the return of the deferral or is one prepared for 2026 because it was take out in 2026?  (hmmm... did I just answer my own question?)

[Paul I]

He gets 2 1099Rs, one for his 2025 tax filing reporting the return of the $4100 with a Code E in Box 7 and one for his 2026 tax filing reporting the earnings also with a Code E in Box 7.

Code E is for Distributions under Employee Plans Compliance Resolution System (EPCRS).

[Basically]

Thanks Paul.. so a 2025 1099-R still needs to be prepared.   The fact that the excess deferral came out in 2026 doesn't play into needing to prepare a 2025 1099-R?

As I wrote my question I thought since the funds came out after 2025 (in 2026) the 1099-R would corresspond with the year the money came out (2026).

 

[Paul I]

Yes, a 2025 1099R still needs to be prepared and included as 2025 income on the participant's tax return.  If they already filed their 2025 return, then they need to file an amended return.

If the refund is not made by April 15, 2025, it is still taxable for 2025 and the excess amount must remain in the plan and cannot be removed until a distributable event occurs (or is corrected under EPCRS).  When the excess amount subsequently is paid, it is taxed again in the year of distribution. The taxation in 2025 does not create tax basis in the plan.