ratherbereading Posted May 20, 2019 Posted May 20, 2019 I have a plan that failed the ADP test. Several HCEs terminated and rolled their money out prior to the refunds being calculated so their balance is $0. What's the fix? 4 out of 3 people struggle with math
C. B. Zeller Posted May 20, 2019 Posted May 20, 2019 Issue a corrected 1099-R with code G for the amount of the distribution less the amount of the refund. Issue a 1099-R with code 8 for the amount of the refund. The amount of the refund would be treated as an IRA contribution for the prior year. If this results in an excess IRA contribution, the participant may withdraw the amount from the IRA before their extended tax deadline in order to avoid the 6% excise tax. See EOB ch. 11, sec. VIII Luke Bailey 1 Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co
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