Excess 401 K Contribution Return

Forum|Forum|1 year ago
March 18, 2025
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I received an excess contribution check for my 401(k) from T. Rowe Price (pre-tax). I was informed that I need to deposit the check first, and then I can transfer it into either a Traditional IRA or Roth IRA. Is this the correct process to avoid penalties? I understand I will receive a 1099-R in 2025. Since the correction is made before April 15, 2025, how should I report this on my 2024 tax return? Specifically, where do I enter this information on the form? For example, the amount is $4,000 -One check amount is the excess amount and the other check is the earnings.

Not A Product Question

MinhT1

You must include the excess deferral in your income for 2024.

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 in 2025.

Below is how to do this in TurboTax Online:

Click on Federal in the left-hand column, then on Wages & Income
Navigate to the list of income categories
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 "2024 Excess 401K Deferrals" and click on Done