You cite PHR but is that who you got the refund from or are you just citing that as an example. The reporting it cites seems inaccurate. a refund of an excess employee deferal should not be capital gain. the original deferral reduced your taxable wages so a return should be ordinaruy income Also reporting loss on line 21 on the 2022 form 1040 does not make sense. it would seem the line numbers are referncing the 2018 form.
This is from IRS website
Timely withdrawal of excess contributions by April 15
- Excess deferrals withdrawn by April 15 of the year following the year of deferral are taxable in the calendar year deferred.
- Earnings are taxable in the year they're distributed.
- There is no 10% early distribution tax, no 20% withholding and no spousal consent requirement on amounts timely distributed.
https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-elective-deferrals-werent-limited-to-the...
this is from IRS PUB 525
You should receive a Form 1099-R for the
year in which the excess deferral is distributed
to you. Use the following rules to report a corrective distribution shown on Form 1099-R for
2022.
• If the distribution was for a 2022 excess
deferral, your Form 1099-R should have
code 8 in box 7. Add the excess deferral
amount to your wages on your 2022 tax return
create a dummy 1099-R use employer name and EIN box & use code 8 in box 7 and report in boxes 1 and 2 the amount of the excess. this will show up on line 1h on the 1040.
