Question

How do I submit a 1099-R for 2018 401k excess contribution? Should I select code 8 instead of code P in box 7? If so, turbotax instructions are incorrect (step 4).

Forum|Forum|7 years ago
June 1, 2019
1 reply
0 views

My employer made a mistake and I ended up with excess contributions for my 2018 401k. I was told that I'd receive a 1099-R form in 2020 for both the 2018 excess contributions and 2019 earnings on excess deferrals. They indicated that I need include the excess deferral as additional gross income in my 2018 taxes.

According to turbo tax instructions under "Steps to Take to Remove an Excess Salary Deferral", on step 4 it indicates I should:

4. Report the excess deferral on your 2018 return in the Income section for Retirement Plans and Social Security whether or not you received a Form 1099-R before you file your return. Enter as much information as you can. Report the excess deferral amount in boxes 1 and 2a, and use code P in box 7. Indicate that this is a 2019 Form 1099-R.

However, code P indicates that the excess contributions were for 2017. Should I use code 8 in box 7 instead? If not, how do I indicate that this a 2019 1099-R substitute form?

TurboTax Premier Windows

macuser_22

Employee

You do not need to wait for a 1099-R next year that will probably require you to amend your 2018 tax return to report the excess on line 7 of your tax return - it can be entered this way and then ignore the 2018 1099-R with a code P in box 7 when it comes.

Excess 401(k) deferrals should be reported in:
(There are several screens to click through to get to the right place)

Miscellionious Income ->
Other Income not reported on a W-2 ->
Other wages (yes) ->
House Hold employee (Continue) ->
Sick Pay (Continue) ->
Other earned income (yes) ->
Source of income (other) ->
Any other income - enter the amount of the excess deferral and an explanation.

[Note: If there were any earning that were returned in 2019 then the earnings will be reported on a separate 2019 1099-R with a code 8 that goes on your 2019 tax return - do not enter the earnings here.]

This will add the returned excess to your 2018 wages on line 1 exactly the same way that the 1099-R would. The only information that is sent to the IRS is the line 1 amount.

For information see IRS Pub 525 page 10
https://www.irs.gov/pub/irs-pdf/p525.pdf

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

A

anothermacuser

You can put the excess contribution amount down as Misc income and label it "excess deferral." That said, it will not reconcile with the W2s showing excess contributions. The TurboTax review will show that as an error and not let your proceed with a clean return. Turbotax needs to somehow have 1099 Misc for excess deferrals offset the excess on the W2s at least for a clean review.