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Excess employer simple plan contributions distributed how to report

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    Excess employer simple plan contributions distributed how to report

    Has anyone ever come across the situation where an employer made excess simple IRA contributions on behalf of an employee and then requested the employee withdraw those and return them to the employer for two previous years?

    The broker holding the account has revised Forms 1099-R twice now and is convinced the correct reporting is that the distribution is taxable (code 1) to the employee, even though the money was returned to the employer.

    I will need to do an amended return for the employee based upon the revised information if this is true or can I make a case that the employee never received the money and therefore it is not taxable to her?

    #2
    Originally posted by btax View Post
    Has anyone ever come across the situation where an employer made excess simple IRA contributions on behalf of an employee and then requested the employee withdraw those and return them to the employer for two previous years?

    The broker holding the account has revised Forms 1099-R twice now and is convinced the correct reporting is that the distribution is taxable (code 1) to the employee, even though the money was returned to the employer.

    I will need to do an amended return for the employee based upon the revised information if this is true or can I make a case that the employee never received the money and therefore it is not taxable to her?
    Excess contributions are usually a code P.

    I guess the employee is still working for the employer> Otherwise he should tell the employer to take a swim.

    Was the employee's W-2 shown with the excess contribution, meaning did the employee get a tax benefit?
    If not, then it should just be a return of monies to the employer.

    Did the employee get the check or did the employer receive the check? In other words, who was the check from the broker written to?
    Last edited by BOB W; 06-17-2008, 01:51 PM.
    This post is for discussion purposes only and should be verified with other sources before actual use.

    Many times I post additional info on the post, Click on "message board" for updated content.

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      #3
      btax

      Thanks Bob for the reply.

      There was a code P on a now revised Form 1099-R.

      No additions to the employees's W-2. I would say the only benefit the employee received was the earnings on the excess contribution which were not included in the distribution. Is that a tax benefit to report?

      The employer got the withdrawl check.

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