SEP Distribution & Contribution within 60 days

[WTMAcctsv]

Hi,
I have a client that tells me he took out $30k from his SEP on 11/8/2023 but then put it back on 12/22/2023. His understanding is that there are no tax consequences since
the money was returned within 60 days. However, he received a 1099-R (2023) for the distribution of the $30k which was coded "1" as an early distribution. He also received a form
5498 for 2023 which denotes the $30k as a Rollover contribution. The tax software is showing a $3k penalty for the early distribution, I've included the $30K as a SEP contribution.
The client is furious because he is being penalized and feels this shouldn't be shown as a distribution. The client talked to the SEP provider who told him they always send a 1099-R
for the distribution. My question, is there any truth to the 60 day rule and if so, is there something else I should be doing or should the provider not be issuing a 1099-R?

[Lion]

Yes, if the provider knows only that part of the transaction, the distribution, it issues a 1099-R. Or, in your case, also the Form 5498 showing the rollover.

Yes, there is a 60-day rule. Confirm the dates using documents from the provider which you seem to have in hand.

Start here and then dig into the IRC: https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions#:~:text=When%20should%20I%20roll%20o ver,of%20circumstances%20beyond%20your%20control.

Contact your software support to find out how to enter a rollover in your software. Or, tell us what software you use.

[WTMAcctsv]

I'm use ProSeries US Desktop. Do you know how I'd enter the rollover? The client is the only one telling me the dates. There are no dates on the 1099-R or the 5498. Can I still go by his dates?

[WTMAcctsv]

I figured out where to enter the rollover. Since the 1099-R is a rollover, do I still enter the $30k from form 5498 as a SEP contribution? Can I go by the dates the client provided as withdraw and
return to SEP dates?

[Lion]

I'd want to see the dates on his monthly statements or something official from the plan administrator. It's NOT 2 months; it's 60 days. And, it's from the time it left the plan, not when he received a check in the mail, to the time the plan recorded it back in his SEP, not the time he mailed it or dropped it off. This one is pretty much the letter of the law. Do your due diligence. When you're satisfied, show the distributions and repayment per your software's instructions.

[Anarchrist]

do I still enter the $30k from form 5498 as a SEP contribution

No. It's shown on the return as a rollover.