401k/403b Over contribution - no W2C

Forum|Forum|2 years ago
April 1, 2024
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So I over contributed to my 401k/403b by a little under $200. The 401k admin has since cut me a check on the amount plus earnings. There were NO taxes withheld.

My employer said they will NOT cut a w2c.

How should I report this on this years taxes via TurboTax? I’d rather not kick the can to next year since the check came before 4/15.

MinhT1

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

Page 11 of IRS Pub 525 under Excess deferrals (the IRS term for 401(k) 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 ‌as a normal 1099-R next year.

Below is how to do this in TurboTax:

Click on Federal in the left-hand column, then on Wages & Income
Locate the section Less Common Income
Select Miscellaneous Income and click Start
Select Other income not already reported on a Form W-2 or Form 1099 and click on Start
Answer the question "Did you receive any other wages? Yes
Click through the questions till you get to Any Other Earned Income
Answer Yes to Did you earn any other wages?
Indicate Other as Source of Other Earned Income and click Continue
For the description enter "2023 Excess 401(k) Deferrals" and click on Done

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99taxproblemsAuthor

Thanks for this! Once I receive a 1099-R Would I use any of the 1099-R details in 2024 tax year?

I had read in another community post:

If you receive the distribution of the excess deferral and earnings by April 15th (which I did) then please note…

Form 1099-R with code P in box 7 can be ignored if you reported the excess as described above in 2023. (Roger can ignore and follow your instructions on reporting)
The earnings on Form 1099-R with Code 8 in box 7 should be reported in 2024. (Does this still hold true if I self report sans 1099-R this year? Do I still need to report next year?)

I plan on filing an extension on 2023 taxes due to an entirely different reason. Wanted to add that if it makes any difference.