Skip to main content
April 7, 2020
Question

I accidentally contacted both my retirement plans regarding to 401k over contribution. As a result, I have 2 refund checks from both plans. what should I do?

  • April 7, 2020
  • 1 reply
  • 0 views
No text available

1 reply

KathrynG3
April 7, 2020

The excess could be seen on Form W-2, unless the excess was already removed for 2019.

 

The 2019 contribution limits for 401(k) retirement plans is $19,000 for workers under 50 years old, $25,000 for those 50 and over. According to this IRS Issue Snapshot - Consequences to a Participant Who Makes Excess Deferrals to a 401(k) Plan regarding consequences to participants who make excess deferrals to a 401(k) plan:

 

The excess is taxed in the year contributed and taxed a second time when the deferrals are ultimately distributed from the plan. The excess plus any earnings must be removed by April 15 of the following year. 

 

To report the excess 401(k) contributions and subsequent distributions, a 2019 plan excess distributed in 2020 is reported on line 1 of your 2019 Form 1040:

 

 

Follow these steps to do this in TurboTax Online:

  • From the left menu, select Federal
  • Wages & Income and scroll all the way down to Less Common Income and click Show More
  • Miscellaneous Income, 1099-A, 1099-C and click Start
  • Other income not already reported on a Form W-2 or Form 1099 and click Start
  • Did you receive any other wages? Answer Yes and click Continue
  • When you get to Any other earned income. Did you earn any other wages? Answer Yes and
  • Enter Source of Other Earned income: select Other and click Continue
  • At the Any Other Earned Income screen, for the Description, enter 2019 Excess 401(k) Deferrals and click Done.

Please note for the Tax Year 2020 tax filing due April 15, 2021: 

2020 Forms 1099-R will be issued reporting the excess.

  • Form 1099-R with code P in box 7 can be ignored if you reported the excess as described above in 2019. However,
  • Form 1099-R with Code 8 in box 7 should be reported in 2020.

(recapped and updated for 2019 this link: Excess 401(k) Contribution solution by Rachel_W

@zhanghe515