@jbowdish6049 wrote:
Hello Rachel_W,
I have over contributed to my 401k in 2020. I am running out of time to have the 401k invest company to return the excess amount before May 17th and have my HR pay role to issue an updated W-2. Can you please help me on what steps in TurboTax I should be following. I'm using Turbotax Deluxe for 2020?
Sorry, but the date to remove a 401(k) excess is not th due date of the tax return, by law it is April 15 of the year after the contribution. After that it cannot be returned and must stay in the account but it still taxable in the year of the excess contribution. It will be taxed again when finally withdrawn after retirement - that is the penalty for missing the April 15 date.
Excess 401(k) deferrals should be reported in:
(There are several screens to click through to get to the right place)
Miscellionious Income ->
Other Income not reported on a W-2 ->
Other wages (yes) ->
House Hold employee (Continue) ->
Sick Pay (Continue) ->
Other earned income (yes) (Includes excess salary deferrals)->
Source of income (other) ->
Any other income - enter the amount of the excess deferral and an explanation.
This will add the returned excess to your 2020 wages on line 1.
For information see IRS Pub 525 page 10
https://www.irs.gov/pub/irs-pdf/p525.pdf
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
