Excess deferral 401k

Forum|Forum|1 year ago
April 9, 2025
1 reply
0 views

Hello,

My husband worked 2 jobs and contributed an excess of $5000 to his 401K. He withdrew the $5000 contribution but had about $1000 earnings also withdrawn.

how would I file that in TurboTax this year? I’ve been seeing conflicting information. I created a substitute 1099-r since fidelity won’t send us one until next year.

do I just report the excess contribution ($5000) in box 1 and 2a? And then report the $1000 next year? TurboTax is saying I can’t use codes P and 8 for box 7 for my 1099 this year.

Ask the Experts - Tax Due - April 2025

MAK70

If you received a 2024 401(k) excess deferral distribution in 2025, you'll receive a 2024 Form 1099-R with distribution Code P in box 7; however, it must be included on your 2024 tax return. You have two options to do that:

1. Wait until next year when you receive the 2024 Form 1099-R and amend your 2024 tax return.
2. Report it now on your 2024 return and ignore the 2024 1099-R when it comes next year.

If you haven’t filed your 2024 return yet and want to report a 2024 excess 401(k) deferral that was distributed in 2025:

Sign in to TurboTax and open or continue your return.
Select Federal, then Wages & Income.
Under Less Common Income, select Start or Revisit next to Miscellaneous Income, 1099-A, 1099-C.
Select Start next to Other income not already reported on a Form W-2 or Form 1099.
Answer Yes to Did you receive any other wages?, then Continue.
Continue until you get to the Any other earned income screen. Answer Yes and select Continue.
On the Enter Source of Other Earned income screen, select Other and Continue.
On the Any Other Earned Income screen, enter 2024 Excess 401(k) Deferrals for the description, enter the amount, and select Done.
For Tax Year 2025:

Your 2025 Form 1099-R form will be issued reporting the excess 2024 401(k) deferral you received as a distribution in 2025.

You can ignore a Form 1099-R with code P in box 7 if you reported the excess as described above in 2024.
But, the earnings on Form 1099-R with code 8 in box 7 should be reported in 2025.

If your 2025 Form 1099-R has an amount in box 4, Federal tax withholding and/or box 14 State withholding, then you must enter it on your 2024 tax return. The 2025 Code P won’t affect your return, but the withholdings will be applied to 2025.

UbercoolAuthor

Thank you so much! I saw this as the other way to report it so just report the extra $5000 this year on my 2024 tax return.

and next year ignore the excess contribution but report the earnings.

got it.

MAK70

Correct- even if you forget and enter the 1099-R as you have it, TurboTax will have a message that you should amend your 2024 so that should remind you! @Ubercool