Question

Handling excess contributon to 403b Roth account in TT

Forum|Forum|2 years ago
April 1, 2024
1 reply
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I changed jobs last year and had two 403b plans and one 457b plan. Since I had reached the $22,500 contribution limit at my first employer the amount I contributed to the second employer is now excess contribution. This second account is a 403b Roth account so would be counted as post tax. I am working with my current employed to withdraw the amount but it may not happen before April 15 this year. How do I report this on TT so I am not paying tax a second time reporting this as other income.

Two I also have $4000 in my 457b but TT is adding this to the excess contribution in the 403b and reporting the whole amount as excess. This $4000 being in the 457b plan should not be subject to a joint limit with 403b but should have its own $22500 limit. How do I worked in TT so the 457b amount of $4000 is not shown as excess contribution.

D

DanaB27

Please be aware, if you do not take out the excess amount by April 15th, then you are taxed twice on the excess deferral left in the plan. This happens once when you contribute it and again when you receive it as a distribution. You can't include the excess amount in the cost of the contract even though you included it in your income.

If you receive the distribution before April 15th then you will get 2024 Form 1099-R codes B and P in box 7 for the returned excess contribution to the 403b Roth account. Don’t add this amount to your wages on your 2023 return.

If you had earnings you will get a 2024 Form 1099-R with code 8 and this has to be reported on your 2024 tax return.

If you receive the distribution after April 15th then the distribution will be taxable in 2024 and the custodian will issue you a2024 Form 1099-R.

Yes, if you’re in a 457(b) plan, then you have a separate limit. You can ignore the warning in TurboTax.

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P

pkg1994Author

Thanks Dana. It would appear that there is not enough time to receive the excess contribution before April 15. In this case, how do I report the excess contribution? Since it is in a 403b Roth account, I have paid taxes on it already.

D

DanaB27

You don't have to do anything else on your 2023 return to report the excess.

If you receive the distribution after April 15th then you should receive a 2024 Form 1099-R showing the distribution as taxable and you will enter it on your 2024 tax return.

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