Question

How to report excess deferral (401k over contribution) in 2018 without a 1099R?

Forum|Forum|7 years ago
June 3, 2019
7 replies
0 views

I reported excess deferrals in turbo tax based on the instructions here https://ttlc.intuit.com/questions/4346599-how-to-report-over-contribution-in-401k-for-2017-on-2017-tax-return-without-a-1099r, however when turbo tax found out that I over contributed to my 401K last year, it asked me to "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".

Those two instructions are different. Which one should I follow? BTW I won't receive 1099R until 2019.

TurboTax Premier Online

T

tomf60

What I did with this is added the 1099 r so I would be taxed the excess in 2018. I get an e-file error as noted below on the summary w2 sheets only. Just override the numbers so you do not have the over amount. This clears the error. These sheets are just summary sheets and do not get e-filed. The w2 stays the same as originally input with the over contribution which is part of the E-file.

C

cdjanzen

Hmmm...that is interesting. So the error is coming up because of a lousy worksheet? How does the W2 stay the same as originally input with the over contribution???

macuser_22

Employee

No. The error comes up because the W-2 box 12 amount exceeds the deferral limit's. It is correct for TurboTax to flag that as a error (which it is) to alert the taxpayer to a possible data entry error that they can correct, but it should not prevent e-fileing if there was no data input error and there really is an excess on the W-2. (The worksheet is just where TurboTax stores the W-2 data.)

(W-2's do not get physically sent to the IRS, just the encrypted data from the W-2 gets transmitted to the IRS and most of that data comes from the worksheet. The TurboTax W-2 "form" that you fill out in the interview is not a W-2 form, just a TurboTax mock up of the form as a data entry screen. Changing the worksheet will probably also change the data sent to the IRS and most likely will cause a data mismatch between what you file and what the employer filed. Worksheet themselves are not sent to the IRS, but the data that they contain can be.)

**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.**

F

flemiaj

Employee

Has it been confirmed TT will be updating to allow for efiling? I am ready to file and don't want to mail in if efiling is an option.

M

mwieneke

I don't understand the logic behind this issue, TT knows its an over contribution and the corrective action, why prevent efiling?

macuser_22

Employee

TurboTax has released a FAQ on this issue - the answer is to print and mail the return.
Excess 401(k) Contribution Preventing e-File

https://ttlc.intuit.com/replies/7327357

**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.**

P

panos_spiros

Wow, that's pretty big letdown. Might as well file the taxes by myself then.

macuser_22

Employee

It does not matter. Both do exactly the same thing - add the excess contribution to your taxable wages. Two ways to do the same thing.

=======

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.

There are two methods to do this:
1) Enter a 1099-R with the returned contribution amount (not including earnings) in box 1 & 2a, and a code "P" in box 7. When asked what year 1099-R say 2019.

or 2)
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) (Includes excess salary deferrals)->
Source of income (other) ->
Any other income - enter the amount of the excess deferral and an explanation.

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.

[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.]

Both methods 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.**

M

mlaksmana

Following the option#2 where you report the over contribution now without 1099-R, which amount do I enter -the gross over contributed $ or the net over contributed $ (after loss and federal tax)? Thanks in advance.