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.

[Basically]

One final question... 

This client is a single member business... they didn't bring this up until 4/10/2026.  It's too late to file a 2025 1099-R with the IRS... isn't it?  Or is there an exception when this happens?  I just want to do this right...

• $4,100 excess contributed in 2025 came out in April of 2026
  ->  Prepare a 2025 Form 1099-R
• $95 -> Earnings that were taken out in April of 2026
  -> Prepare a 2026 1099-R

Prepare a 2025 1099-R and file it now.  Give the participant their pieces of the form. 

Thanks

[Paul I]

It is not too late to file the 1099R for 2025. It is never too late to file 1099R for 2025 as long as you are reporting amounts that are taxable in 2025.

To further document the prior comments, if you look at page 7 of the instructions for the 2025 instructions for 1099-R it says:

"Corrective Distributions You must report on Form 1099-R corrective distributions of excess deferrals, excess contributions and excess aggregate contributions under section 401(a) plans, section 401(k) cash or deferred arrangements,..."

"Excess deferrals. Excess deferrals under section 402(g) can occur in section 401(k) plans, section 403(b) plans, or SARSEPs. If distributed by April 15 of the year following the year of deferral, the excess is taxable to the participant in the year of deferral (other than designated Roth contributions), but the earnings are taxable in the year distributed. Except for a SARSEP, if the distribution occurs after April 15, the excess is taxable in the year of deferral
and the year distributed. "

I repeat my earlier caution: 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.

[R Griffith]

I respectfully disagree with Paul I - there should be 2 1099R's for 2026.  1 will be for the return of contribution ($4,100) and will have a tax code P.  The other will be for the earnings in 2026 ($95).  The tax code P lets the IRS know the amount was previously taxable.

See below from the 2025 instructions of the 1099-R:

P—Excess contributions plus earnings/excess deferrals taxable in 2024 or a previous year.

See the explanation for Code 8. The IRS suggests that anyone using Code P for the refund of an IRA contribution under section 408(d)(4), including excess Roth IRA contributions, advise payees, at the time the distribution is made, that the earnings are taxable in the year in which the contributions were made. Note. A participant is allowed to take out a prior year excess contribution when the IRS provides tax relief by postponing the tax filing due date, for example, due to a federally declared disaster.

[R Griffith]

8 hours ago, Paul I said:

I repeat my earlier caution: 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.

I believe Paul I is trying to say that the refund must be done by April 15, 2026 - not 2025.

Or at least I am assuming the OP was someone that over contributed in 2025 and is taking their distribution by April 15, 2026.

You do not need to create a new 2025 1099R - see above how you code the 2026 1099R with the Box 7 Code of P

The code E 1099R as described in prior messages above are for EPCRS corrections - but a 402g correction is not an EPCRS correction.  This would only need to be done if there was a 402g error in a single plan instead of a multi-plan error that did not correct by April 15.

If I am miss understanding the situation, happy to be corrected.