The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Speedwagon on February 15, 2018, 12:28:54 PM
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I need some help, because Lincoln Financial, the company that administers the 401k for my employer, can't give me a straight answer(or the same answer twice).
For 2017, I contributed to both the TSP and my 401k. At the end of the year, I went over $18k by $168 between the two accounts. So I did a distribution request to bring it down to $18k, since LFG advised that I had until tax day to "correct" my overcontribution. I expected this to generate a 1099R for the 2017 year. But LFG is saying this isn't the case, it will be a 1099R for 2018.
The entire point of this was to bring 2017 into compliance with the contribution limits. Does anyone have some advice for this situation?
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Ugh. Yeah, they're right. Since they're making the distribution in 2018, it goes on the 2018 1099-R. But the IRS is still likely to flag your return.
I had a similar issue in 2014, when I did a recharacterization of Roth IRA contributions to traditional IRA contributions. Since I made the re-characterization in 2015 (prior to filing 2014 taxes), it showed up on my 2015 Form 5498. I even sent a nice note to the IRS, with appropriate documentation. Didn't matter. They still sent me a bill for about $1000 worth of taxes that I didn't owe. It took me about 60 hours of my life strung out over a year and a half to get that shit straightened out.
Good luck. Maybe you'll slip through, or maybe you'll at least get assigned a competent agent who actually understands tax law.
Related note: I don't do re-characterizations any more, period. Not worth it.