Question

Reporting Return of 401k Overfund

Forum|Forum|2 years ago
April 4, 2024
1 reply
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I over funded my 401k in 2023 - (after tax contributions). The excess was returned prior to me filing this year. I understand the amount that was earned on this is taxable and will be reported on a 1099 in 2024, but what do I do about the excess that was returned. It should not affect my gross or taxable income, as it was contributed after tax. If I enter my W-2(s) as given, it will show an overfund. How do I report that it has been returned back to me? I am not confident that I will get a corrected W-2 by filing deadline and the only change would be the contribution amount, no changes in taxes owed or withheld. Any advice is appreciated. Thank you.

RachelW33

You will not get a corrected W-2 for excess 401(K) contributions. You need to include the excess contributions as wages on your 2023 tax return and report the earnings on your 2024 return.

You should report the excess contributions to your 401(k) as Wages on Line 1 of your 2023 Tax Return by following these steps in TurboTax Online:

Login to your TurboTax online account and click on Pick up where you left off
On the left side of your screen, click on Federal and then Wages & Income
Scroll down and click on Less Common Income
Choose Start/Revisit next to Miscellaneous Income, 1099-A, 1099-C
Select Start/Revisit next to Other Income Not Already Reported on a Form W-2 or Form 1099
Answer Yes to the question Did you receive any other wages?
Click Continue until you get to the page titled Any Other Earned Income and answer Yes to the question Did you earn any other wages?
On the Enter Source of Other Earned Income screen choose Other and click Continue
For the description enter 2023 Excess 401k Deferrals and click Done

As you mentioned, you will receive a 2024 Form 1099-R reporting the distribution of your excess deferral next year with a Code P in Box 7 (taxable and reportable on your 2023 Tax Return) which you can ignore if you followed the steps above.

In addition, the earnings (if any) will be reported on a separate 2024 Form 1099-R with a Code 8 in Box 7 which you will need to include on your 2024 Tax Return.

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