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2nd job withdrew 4% of my income into a 401k to me in 2020. My 1st job maxes out my 401k. Result is excess $320 contribution. It is 5/17. How to I best address?

Forum|Forum|5 years ago
May 17, 2021
1 reply
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Vanguard will not facilitate withdrawing the money. I've spoken with them twice. They say it is too late. The turbotax help suggests as long as I withdraw by 5/17, it should be okay. Haven't done a withdrawl at this point because Vanguard won't help. Its only $320. I just want the problem to be resolved. Thanks

Best answer by DanaB27

The deadline to remove an excess deferral was April 15th, the date to remove excess salary deferrals has not been extended (IRS April 8th). Since it is after the deadline you can leave the excess in the account but you will be taxed twice on the excess amount. Once when you take the distribution and once on your 2020 tax return.

Please follow the steps below to report the excess deferral:

Login to your TurboTax Account
Click "Federal" from the left side of your screen
Scroll down to "Less Common Income" and click "Show More"
Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
On the "Any Other Earned Income" screen enter "2020 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

D

DanaB27Answer

The deadline to remove an excess deferral was April 15th, the date to remove excess salary deferrals has not been extended (IRS April 8th). Since it is after the deadline you can leave the excess in the account but you will be taxed twice on the excess amount. Once when you take the distribution and once on your 2020 tax return.

Please follow the steps below to report the excess deferral:

Login to your TurboTax Account
Click "Federal" from the left side of your screen
Scroll down to "Less Common Income" and click "Show More"
Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
On the "Any Other Earned Income" screen enter "2020 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".