Get your taxes done using TurboTax

Once you took corrective actions and added the excess deferral to the regular 401(k) you can ignore the warning in TurboTax. You don't get a penalty calculated but if you do not take out the excess amount by April 15th, then you are taxed twice on the excess deferral left in the plan.  This happens once when you contribute it with the steps below and again when you receive it as a distribution.

To report the excess deferral to a regular 401(k) you can either enter a 2023 Form 1099-R with code P or use the steps below (usually easier to enter):

1. Login to your TurboTax Account 
2. Click "Wages & Income" (under Federal) on the left side of your screen
3. Scroll  down to "Less Common Income" and click "Show More"
4. Scroll down to "Miscellaneous Income, 1099-A, 1099-C" and click "Start"
5. Select "Other income not already reported on a Form W-2 or Form 1099" and click "Start"
6. On the "Did you receive any other wages?" screen answer "Yes" and click "Continue"
7. Continue until you get to the "Any other earned income" screen, answer "Yes" and click "Continue"
8. On the "Enter Source of Other Earned income" screen select "Other" and click "Continue"
9. On the "Any Other Earned Income" screen enter "2022 Excess 401(k) Deferrals" for the description, enter the amount and click "Done".

If you receive the distribution of the excess deferral and earnings by April 15th then please note for the Tax Year 2023 tax filing due April 15, 2024: 

• 2023 Form 1099-R with code P in box 7 can be ignored if you reported the excess as described above in 2022. 
• However, the earnings on 2023 Form 1099-R with Code 8 in box 7 should be reported in 2023.

Please be aware if you made an excess contribution to a Roth 401(k) and received the excess by April 15th, 2023,  then you do not add the excess to your 2022 income you will only report the earnings on your 2023 tax return.

@BeginnerTaxFiler