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Old 11-24-2016, 09:20 PM
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How to handle removing Excess Contribution from IRA

I am little confused and don't see any clear guidelines how to handle the situation. i am filing taxes online for many years.
So here is the situation -

In 2013, i moved my previous employer 401k ( i worked till 2008 for that employer) to Regular IRA and received form 1099-R with Distribution Code 'G' for $5000.00.

But this months (nov 2016) received a letter from my previous employer stating there was error in calculating before tax amount and i should ask for removal of excess distribution from Reg IRA which i did.
Now i have received two 1099-R forms (for year 2013) - one for $4500.00 with Dist.Code 'G' and another for $500.00 with Dist.Code 'E' (excess).

Do i file tax return for year 2013 and show $500.00 as additional income both federal and state? i had refunds for 2013.
I assume due to refund in 2013, i will have to pay some money to Federal and State?
Do i need to file Taxes for 2014/2015 as well since state refund is taxable and will change due to adjustment in year 2013 income?

Thanks in Advance
ajay


Last edited by ajaykumar : 11-24-2016 at 09:25 PM.


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Old 11-25-2016, 09:07 AM
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Do i file tax return for year 2013 and show $500.00 as additional income both federal and state?========>> the Code E only applies to employer plans, not IRA's. Direct rollovers are identified on Form 1099-R by using either the G or H distribution codes in box 7. The total amount of $5K is reported on 1040 line 16a unless there is a number on form 1099R box 2a.



i had refunds for 2013.
I assume due to refund in 2013, i will have to pay some money to Federal and State?==>UNLESS there is a number on form 1099R on box 2a, you do not owe additional tax; or a;so UNLESS your new tax liability is larger than your old tax aliblity, you do not owe additional tax.


Do i need to file Taxes for 2014/2015 as well since state refund is taxable and will change due to adjustment in year 2013 income?=>as mentioned above



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Old 11-25-2016, 04:18 PM
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so in 2013 i got 1099R with $5k and box 2a amount as zero.(Dist Code G)

Now (Nov 2016) they have sent me two 1099-R's - one for $4.5k and box 2a amount as zero (DistCode G) and another 1099-R for .5k and box2a amount as .5k (Dist Code E).

From Turbo tax seems correct in my situation - "t appears that this Code E for a corrective distribution from your SIMPLE IRA back to your employer is perfectly legitimate, although uncommon."

Anyway, based on your response and box2a amount, looks like i will have to file 2013 return again and 2014/2015 due to changes in 2013 taxes.
i guess need to start loving filing taxes!

Thanks for your quick response, if you have any additional comments based on above please share.



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Old 11-25-2016, 05:01 PM
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Quote:
Originally Posted by ajaykumar View Post
so in 2013 i got 1099R with $5k and box 2a amount as zero.(Dist Code G)

Now (Nov 2016) they have sent me two 1099-R's - one for $4.5k and box 2a amount as zero (DistCode G) and another 1099-R for .5k and box2a amount as .5k (Dist Code E).

From Turbo tax seems correct in my situation - "t appears that this Code E for a corrective distribution from your SIMPLE IRA back to your employer is perfectly legitimate, although uncommon."

Anyway, based on your response and box2a amount, looks like i will have to file 2013 return again and 2014/2015 due to changes in 2013 taxes.
i guess need to start loving filing taxes!

Thanks for your quick response, if you have any additional comments based on above please share.
so in 2013 i got 1099R with $5k and box 2a amount as zero.(Dist Code G)===>Correct as you said, as the total amt was reported on 1099R box 1 as gross distribution.

Now (Nov 2016) they have sent me two 1099-R's - one for $4.5k and box 2a amount as zero (DistCode G) and another 1099-R for .5k and box2a amount as .5k (Dist Code E).===>Then you need to report the amt on 1099R box 2a on your 1040 line 16b. Box 2a indicates Taxable amount which was the distribution amount ($.5k) by filing 1040X for 2013. The box "taxable amount determined" refers to whether or not the plan administrator or trustee making the payment to you has information available to make tax determination of the treatment in certain types of plans where the amount of your proceeds can include both before and after tax contributions or some other formula whereby distributions to you are only partially taxable. The box is nearly always checked if the distribution is from an IRA or rollover IRA. While your distribution may qualify for exception from the 10% penalty, it will still be fully counted as taxable in your ordinary income. There isn't any exception from ordinary income taxation unless the funds are Roth or other type of after-tax accounts. This part of the distribution is generally taxable. If there is no entry in this box, you may not have all the facts needed to figure the taxable amount. In that case, the first box in box 2b should be checked. For a direct rollover, other than from a qualified plan to a Roth IRA, zero should be shown, and you must enter zero on the ?Taxable amount? line of your tax return. If you roll over adistribution (other than a distribution from a designated Roth account) from a qualified plan (including a governmental section 457(b) plan) or section 403(b) plan to a Roth IRA, you must include on the ?Taxable amount? line of your tax return the amount shown in this box plus the amount in box 6, if any. If this is a total distribution from a qualified plan
From Turbo tax seems correct in my situation - "t appears that this Code E for a corrective distribution from your SIMPLE IRA back to your employer is perfectly legitimate, although uncommon."

Anyway, based on your response and box2a amount, looks like i will have to file 2013 return again and 2014/2015 due to changes in 2013 taxes.
i guess need to start loving filing taxes!=====>Correct ; to report it on 1040 for 2013 tax year you need to file 1040X for 2013 tax year; you need to pay more tax on $500 on your 2013 return or your refund amt for 2013 ?d be decreased a little bit I guess. However, you do not need to file 1040X for 2014/2015.



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