If I am understanding this correctly this is not nearly as bad as I feared.
I found a link
which includes the paragraph
If an excess contribution in your traditional IRA is the result of a rollover and the excess occurred because the information the plan was required to give you was incorrect, you can withdraw the excess contribution. The limits mentioned above are increased by the amount of the excess that is due to the incorrect information. You will have to amend your return for the year in which the excess occurred to correct the reporting of the rollover amounts in that year. Do not include in your gross income the part of the excess contribution caused by the incorrect information.
My actual numbers are
- 2014 non-deductible IRA contribution (8606-1) $3,391
- 1099-R recently reclassified as code-E $4,149.
As I read it, in general the total of the amount originally contributed to an IRA and the amount retroactively contributed via 5329-10 would need to be less than $6500. However in the case of a plan administrator error, this limit is waived so I am OK with a total of $7,540. This means I can solve the issue with a single amended return for 2014, and the issue does not need to continue into my 2015 and 2016 returns. (I put the filing of my 2015 return on hold pending a complete understanding of this issue.)
There is one other hiccup. I took a large buyout offer from my fortune-100 employer in the summer of 2013 and left the workforce. My only earned income for2014 was the bonus from my former employer. Normally there is a limit that the total amount contributed to an IRA cannot be more than the total of all W-2 earned income, however my W-2 total is less than $7,540.
The spirit of the law would pretty clearly allow this. If my former employer and their plan administrator had originally done this correctly and had not diverted some earned income to my 401K, then the W-2 would have included all the money that is now in the code-E status. However I have observed in life that it is often the letter of the law and not the spirit that counts.
I also discovered today that the attorney for the plan administrator was supposed to send me a cover letter along with the updated 1099-R's providing some kind of information that might be useful, but I only received the 1099R's, not the cover letter. I am attempting to obtain this letter.
Problem almost solved