Return of Excess question

Submitted by Kevin O'Hearn on Mon, 2020-04-20 14:34

Hello,

I have a client who rolled over funds from a retirement plan into an IRA on 02/01/20. Former company sent a letter dated 03/25/20 that they rolled over an excess amount of $1625 and the amount includes earnings. I was under the impression that we would still need to do a calculation based on the $1625 since 02/10/20 to see if there were any additional earnings or losses. Would this not be the case?

Thank you.



Submitted by Alan - IRA critic on Mon, 2020-04-20 16:31

  • Client needs to advise the IRA custodian that a 2020 excess contribution of 1625 was made to the IRA and should be returned plus or minus income generated on this excess in the IRA. The IRA custodian will calculate the earnings.
  • The employer plan should issue 2 1099R forms for 2020. The first in the reduced amount eligible for the direct rollover (coded G), and the other for the 1625 coded either 8 or E depending on the nature of the excess amount.


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