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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 6913
Experience:  15years with H & R Block. Divisional leader, Instructor
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In 2008 tax year my deceaded Husband took 40,000.00 dollars

Resolved Question:

In 2008 tax year my deceaded Husband took 40,000.00 dollars out of is 401 k and forged my name. He did not report that he had taken the 40,000.00 and his company did not report that he had taken it. Who is responsible for the pentaties and interest his estate or his company?
Submitted: 2 years ago.
Category: Tax
Expert:  Robin D. replied 2 years ago.

Robin D :

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Robin D :

The penalties and interest for a distribution from a deferred retirement account are the responsibility of the taxpayer. In this case the reporting of the distribution was on your husband so his estate will be looked to for the payment.
If the company allowed your deceased husband to borrow against the 401K then they were not responsible for reporting the event for tax purposes. If he received a distribution from the 401K then that should have been shown on the 1099R and a copy of the 1099R should have been sent tot he IRS as well.
The estate can request that penalties be abated on the grounds that no 1099R was issued but the interest is required by law and cannot be reduced or abated unless the IRS gives written advice that is incorrect and results in interest.
If the money was a loan against the 401K then the amount would not be reported until the loan was in default or the employee was no longer making the payments to pay the loan back. That would then make the remaining amount on the loan taxable and a 1099R would have been issued.
The company will have it's own penalty for not issuing a tax reporting document within the timeframe required if the IRS pursues the issue and the company cannot show that they did report the event.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 6913
Experience: 15years with H & R Block. Divisional leader, Instructor
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