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I was told by my employer that I overfunded my 401k. I contributed 10000. But because of the make up of our small company and the contributions, I was only allowed to contribute 8600. My employer told me that I will get a check for 1400 back from the company that administers the 401k. He told me to enter this on my 2000 taxed as a pension distribution and that I would get a 1099-R but not until the end of 2000. Does this sound kosher that I would only get the 1099-r at the end of the year?

The 1099-R part is correct, but the reporting information your employer is giving you is wrong. You report the excess on your 2000 return as wages on line 7 of the 1040. See page 7 of IRS Publication 525.

You'll receive a 1099-R for 2001 which should have a distribution code "P." On your 2001 return you'll simply show the gross amount on line 16a of your 1040 and zero on line 16b.

Also can I still contribute 1900 to a simple IRA which I have through another job, to reach my limit of 10500 of tax deferred income?

I doubt it. The amount is OK, but AFAIK, SIMPLE contributions must be through salary deduction, and it's too late to do so for year 2000. However, I find the SIMPLE rules far from simple. Check with the employer or plan representative.

TMF ExRO
Phil Marti
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