How to determine the cost basis of over contribution to 401k on 1099-R?

Forum|Forum|2 years ago
April 11, 2024
1 reply
0 views

Work for two employers in 2023 and over contributed above the 401k limit. Received two 1099-R forms and it seemed TurboTax treat the distribution as income but asks for cost basis that is not found in 1099-R form, any suggestion on how to calculate or where to find the cost basis?

TurboTax Online

DanaB27

To clarify, what is the code in box 7?

Generally, you must include the excess deferral in your wages in the year the excess deferral happened. Any earnings will be include in the year of the distribution. Please see Pub 525 for details.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

covert-eric

What does that even mean?

DavidD66

@covert-eric The cost basis of the over contribution is the original amount of the excess contribution. For example, lets say you over contributed to your 401(k) by $1,000. Once you realized that you had over contributed the mutual fund that the $1,000 was invest in had gone up 10%. The $1,000 contribution is now $1,100. Not only do you have to withdraw the $1,000 over contribution, you also have to withdraw the $100 of gain. Your cost basis portion of the $1,000 you have to withdraw is $1,000.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"