Hello. If one has an excess 401k deferral contribution, and receives it back and documented in a 1099-R, net of a loss, two questions please.
1. To confirm, the amount of that loss should be reported in Less Common Income, Misc Income, Other inc not already reported on a w2 or 1099, “Other” and then put amt and description as “20xx excess 401k deferral - loss netted in gross distribution on 1099R”. Is this correct? If not, please elaborate. Presumably, you need to do that the actual true excess amt is reported as the combo of the gross dist amt per the 1099R (which was reduced by the loss) AND this Other Inc amt (equal to the Loss). Is this accurate?
2. Separate from recording additional income, can and should one report the actual loss as a capital loss on Schedule D? Isn’t it in effect, an after tax amt that was invested and lost value? Isn’t it the same as if one invested after tax funds, bought say stock or mutual funds at X then sold at a loss? Wouldn’t that be a capital loss that could be reported? Please advise and help me understand.
Thanks very much in advance!
