Hi Turbo Tax Community. I have a question about excessive contribution to my 401k and how vanguard handles the situation. I requested refund of the excessive amount, and they gave me seemingly contradict information in their letter with the check to me.
Here are the details:
In 2021, I changed job and worked for two companies. I over contributed $300 to my 401k in 2021, and my current company's 401k administrator (vanguard) returned the $300 to me via a check in February 2022. The check is received along with a letter.
The letter states that:
"Your corrective contribution of excessive deferrals is required by the IRS to be reported on two 2021 IRS forms 1099-R.
One of these tax forms will be specifically coded to report the principal amount of your excessive deferrals which will be tax to you in 2022. These forms will be sent to you in January 2023.
Because you will not receive the IRS form 1099-R till next year, do not wait to file your 2021 form 1040. In addition, if you have already filed your form 1040 and did not included the principal amount of excess deferrals as taxable income (line 7), you will need to file an amended return for this year.
The amount of your refund is not eligible for rollover into another qualified plan or individual retirement account ("IRA") "
Here is my confusion:
1. In the letter it stated that I need to file my 2021 tax with the principal amount of excess 401k contribution but I will not receive any tax form for the excess till 2022. How do I report the amount?
2. I called vanguard and asked for some help and explanation and they told me that I will receive two 1099-R in 2023, and the excess $300 will be my 2022 income.
Based on my research, my employer should give me a new w-2 so that I can report it this year. He https://www.nerdwallet.com/article/investing/excess-401k-contribution-what-to-do
But vanguard said that was not how they handle it.
If I report the excess amount in 2021 tax and vanguard gives me 1099-R in 2023 for 2022 tax, does it mean that I will be taxed twice?
Thanks.
