Question

1099-R Code E gross distribution doesn't match check

Forum|Forum|5 years ago
February 23, 2021
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Received a check on 12/30/20 for excess annual additions as a result of IRS ECPRS process. I received a 1099-R on 1/31/21 from the plan administrator. The amount in box 1 and 2a are the same but they are nearly twice as much as the check that I received. The notes from the plan administrator indicate form 1099-R may be more than your check due to "lost earnings". What does this mean? The tax consequences are significant.

ColeenD3

You need to speak to the plan administrator. From an IRS description regarding Code E – Distributions under Employee Plans Compliance Resolution System (EPCRS):

If you make mistakes in your retirement plan, you may use the IRS Employee Plans Compliance Resolution System (EPCRS) to fix your mistakes and avoid the consequences of plan disqualification. The correction for a mistake should be reasonable and appropriate. The correction method should resemble one of the methods described in the Internal Revenue Code. You should consider all facts and circumstances when determining which method to use. Rev. Proc. 2019-19 is the guide that governs the EPCRS program.