I retired at the end of December 2022. My employer's accounting practice is such that they have to close out all payroll related items before the actual separation date. Because of this, they paid my last paycheck (for January 2023) in December 2022. This last paycheck contributed $2,200 to 401K because I had it on automatic plan to invest from every paycheck.
This spells trouble because I had already maxed out on my annual 401K contribution before receiving this unexpected paycheck. As a result, I received a W2 that shows I have contributed more than the allowed annual maximum.
What makes this crazy is that the 401K administrator's system caught this over contribution and is now sending me a check as a refund. They said they will issue me a 1099R next year for the distribution of excess contribution.
Everything is good, right? No! Because the 401K's year end statement shows my annual contribution amount before the last excess contribution! So the annual contribution amount on W2 and year end statement does not match.
So my question is, how do I handle this situation?
1) Do I file my taxes as if the excess contribution didn't happen since the year end statement does not show the excess amount? After all, I have the year end statement to prove I didn't go over the limit if I ever get audited.
2) Or do I file it with the over contribution amount shown on W2? Will TurboTax have a way to show the excess amount was returned to me? Do I pay any penalty or interest?
Thank you in advance!!!
