@macuser_22 wrote:
If the plans fault, shouldn't the 1099-R have a code E?
Probably, but I think I've seen cases described where code 8 was used. Code 8 might be proper if the plan's elective deferral limit was less than the statutory limit. Some plans set a lower limit to avoid ADP and ACP failures in the first place. It might also depend on when the employer discovers the distribution and makes the corrective distribution.
Either way, the plan is required to provide explanation to the employee.
