Questions about removing excess Keogh contributions

[Guest Barney Byrd]

My questions concern removing excess contributions from a one owner/employee Money Purchase Keogh plan for 2000 (calendar year). I'm trying to make sure I understand all the tax ramifications.

I checked the information on page 13 of the 1999 IRS Publication 560. It seems to say that the distribution will not be taxable if the plan administrator is notified by March 1, 2001, and the excess, plus earnings, are distributed no later than April 17, 2001. The information I found appears under the subheading "Elective Deferrals (401(k) Plans)." Is this also application to excess contributions made to a Money Purchase Pension Plan?

I also want to make sure I understand the rules for issuing Form 1099-R. Must the plan administrator issue a 1099-R for 2000 or 2001 to report the distribution of excess deferrals? The 1099-R instructions are confusing as well about which distribution code should be shown in box 7. Distribution code "E," denoting excess IRC § 415 contributions seems applicable to the excess, but says that it may not be used in conjunction with any other distribution code. Thus I assume the earnings are reported on a separate Form 1099. If the earnings are distributed in 2001, will they be reported on a 2001 Form 1099 and thus be taxable in 2001? If a separate Form 1099-R is used to report the earnings, which distribution code should be used in box 7, Code 8 or Code P? I believe such a distribution, while taxable, is not subject to the 10% early distribution penalty under IRC § 72(t).