Reporting excess salary deferrals (excess 401k contributions) returned to you after the end of the tax year but by April 15th of the following tax year on your 1040. Do not create your own 1099R for this situation.
Any excess 401k contributions returned before the end of the current tax year should be covered in a 1099R from the 401k for the current tax year and entered as a 1099R in Turbo Tax.
Page 10 of IRS Pub 525 under Excess deferrals (the IRS term for 401K contribution is deferral) tells us to include the excess deferrals as income on line 7 of Form 1040 if the money was returned after the end of the tax year but by April 15th of the following tax year. You need to report only the excess contribution, not any money generated by the investment of the excess contribution. What you earned will be covered by a 1099R for the following tax year and will be entered then as a normal 1099R.
Below is how to do this in TurboTax Online:
- Click on Federal
- Click on Income & Expenses
- Scroll down to the bottom of the page for "Less Common Income"
- Click on "Show more"
- Select Miscellaneous Income and click Start or Update
- Select "Other income not already reported on a Form W-2 or Form 1099" and click on Start
- Answer the Question "Did you receive any other wages? Yes
- Click through the questions till you get to Any Other Earned Income
- Answer Yes to "Did you earn any other wages?
- Indicate "Other" as Source of Other Earned Income and click Continue
- For the description enter "2020 Excess 401K Deferrals" and click on Done
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