General: Why would TDS send me a 1099r?

Any time TDS issues funds directly to a participant for a taxable event under the plan they must issue a 1099r. The following are examples of reasons you may receive a 1099r from Tax Deferred Solutions:

  1. You may have contributed funds to your account in a manner that was not compliant with the IRS rules and regulations or the plan terms. This is often due to excess contributions above the mandated limits or from an improper form of compensation such as an early retirement incentive. If Tax Deferred Solutions returned the funds to you they would issue you a 1099r at the end of the year.
  2. TDS may have received funds back from an investment provider due to an issue with your account or no account established. Unless the funds can be forwarded to another account under the plan they must be returned. The contributions can be returned to the employer to give back to you, who would then correct your W-2 or the contributions may be returned directly to you by TDS. If TDS returned the funds directly to you than TDS would issue a 1099r at the end of the year.
  3. You may have received a distribution from your account but your investment provider has notified TDS that the distribution was not reported by that organization. This may occur if the distribution is sent to TDS on your behalf and then TDS issued the funds to you.
  4. Your loan may have gone into default. A loan from a 403(b) or a 457 account is a distribution but taxation and early withdrawal penalties are waived as long as you meet the compliance requirements. If you default on your loan the IRS deems the loan a distribution so the proceeds outstanding and any interest or fees are immediately taxable. You will usually receive a 1099 from your investment provider, but may receive the form from TDS if the investment provider does not issue the 1099r.
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