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March 5, 2025
Question

How to report excess deferral s 401k contribution?

  • March 5, 2025
  • 1 reply
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Last year (2024) I have excess contribution in 401k. I still haven't filed the tax return for 2024. I have already withdrew the excess deferral amount from my 401k account but still haven't received 1099-R form. So how should I report this to my 2024 tax return ? 

What else I need to do to report my excess deferral amount to IRS ?

1 reply

March 5, 2025

You will not receive a 2024 form 1099-R.

 

Report excess salary deferrals (excess 401k contributions) returned to you after the end of the tax year but by April 15th of the following tax year on your 1040 as Wages.  Do not create your own 1099-R for this situation.

 

Page 11 of IRS Pub 525 under Excess deferrals (the IRS term for 401K contribution is deferral) tells us

 

If your deferrals exceed the limit, you must notify your plan by the date required by the plan. If the plan permits, the excess amount will be distributed to you. If you participate in more than one plan, you can have the excess paid out of any of the plans that permit these distributions. You must notify each plan by the date required by that plan of the amount to be paid from that particular plan. The plan must then pay you the amount of the excess, along with any income earned on that amount, by April 15 of the following year. You must include the excess deferral in your income for the year of the deferral. File Form 1040 or 1040-SR to add the excess deferral amount to earned income on line 1h.

 

What you earned will be covered by a 1099-R for the following tax year and will be entered then as a normal 1099-R.

 

Below is how to do this in TurboTax Online:

  1. Click on Federal in the left-hand column, then on Wages & Income
  2. Navigate to the list of income categories
  3. Locate the section Less Common Income
  4. Select Miscellaneous Income and click Start
  5. Select Other income not already reported on a Form W-2 or Form 1099 and click on Start
  6. Answer the question "Did you receive any other wages?  Yes
  7. Click through the questions till you get to Any Other Earned Income
  8. Answer Yes to Did you earn any other wages?
  9. Indicate Other as Source of Other Earned Income and click Continue
  10. For the description enter "2024 Excess 401K Deferrals" and click on Done
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March 5, 2025

I am still a little confused.

Are you saying that I don't need to report anything in 2024 Tax Return I am filling to IRS right now in 2025 ?

 

I only need to report this in 2025 Tax return which I will file in 2026 ? 

March 5, 2025

No.

 

You're going to report the additional amount that you put into the 401K and then pulled out as wages for this year.  You got a deduction for that amount but you shouldn't have since you weren't allowed to deduct it.  So report the extra amount as income on your return. 

 

You can do that by entering it into the wages and income section and following the steps that @MinhT1 outlines above.  

 

That is all you need to do for your 2024 return.

 

Then, for 2025, you will receive a 1099-R.  You'll report that at that time.

 

@Jindalanshul28 

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