Hello,
I need some assistance here. I am working on my 2020 tax return. In the beginning of 2020, I was notified that I exceeded my allowable 401k contributions that was based from my 2019 contributions. There are calling it 401K excess contributions. The company handling our company retirement fund, did say that I will receive a 1099-R in 2020 which I did and I want to make sure I am handling the entry correctly. In 2019 I was 55 and in 2020 I was 56. I am not sure if you need to know my age but I figure I would supply it.
Recap - the 401K excess contributions was based off of my 2019 income however the money was paid back to me in the beginning of 2020. Now the 1099-R shows the following:
Box 1: $3666.49
Box 2a: $3666.49
Box 4: $733.30 (Federal Withholding)
Box 7: Code 8
First question is on my 2020, I should report the $3666.49 on my wages line correct? So the amount will be on my Form 1040 Line 1 - Wages Salaries etc, Correct?
Second question: The net result from the 1099-R I received was $2933.19 and I put that in a Edward Jones Traditional IRA account. I received my statement from Edward Jones and it shows the $2933 as a contribution in 2019. Now I did not put that $2933 on my 2019 return on Form 8606 because I honestly thought that it would get reported on my 2020 Form 8606. Due to my income earnings and the fact that I am covered in a 401K at work, my understanding is that the $2933 would be considered a Non Deductible Contribution. Should I have reported this on my 2019 Form 8606? If the answer is YES and I did not, can I add the amount to my 2020 Form 8606 on line 2 Your Total Basis in Traditional IRAs
And I have the same situation for 2020. and I make sure I report it correctly this year. In the beginning of 2021, I received noticed that again I over contributed to my 401K (401K excess contribution). The money I received back I contributed $4500 to the same Edward Jones Traditional IRA account the $2933 went into and I put 2500 into Edward Jones ROTH account. If I made a mistake on my 2019 by not reporting my nonductible contributions I want to make it right on my 2020. My statement from Edward Jones show for 2020 IRA contribution of $4500. Again with my income earnings and already participating in a employer based 401K, will I enter the $4500 as a nondeductible contribution for 2020 on line 1 of Form 8606?
If I did it correctly
Form 8606 would look like this
Part I
Line 1: $4500
Line 2: $2933 (last years contribution 2019)
Line 3: $7433 (adding lines 1 and line 2)
Line 6: $2933 (enter the value of all your traditional, SEP, etc as of December 31, 2020.
Lastly, Since I also contributed to a NEW ROTH Account, that does not get reported on Form 8606 correct?
And when the company issues me a 2021 1099-R next year for the excess 401k contributions, I would again have it added to my Wages Line correct?
Thank you in advance for your assistance.
LF
