Not unique at all - happens all the time when changing employers. In fact neither employer is required to return the excess but most will do it if before April 15 in the year after the excess was contributed.
A return of excess deferrals for 2020 had to be removed before April 15, 2021 or it cannot be removed at all - it just stays in the account, However, since you did not pay any tax on that money when it was contributed, you must pay that tax now. If you already filed 2020 tax return, then you will need to amend and add the amount of excess on the 1040 line 1. Since you will not have a 1099-R to enter then it must be entered as I will show below.
After you retire or take the money out, it will be taxed again That double tax is the penalty for not removing it in time.
The IRS explains this in Pub 525 page 10.
https://www.irs.gov/pub/irs-pdf/p525.pdf
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 taxable excess to your 2020 wages on line 1.
**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.**
