I have almost identical situation this year. Made excess employee contribution of about $7361.38 to my Solo 401k in calendar year 2020. It was put into a money market fund and earned $0.20 income. Realized the mistake and asked Fidelity to return the amount $7361.58 to me in early 2021. Received the check from them. I reported the excess contribution as income on my tax return for year 2020, filed before April 2021.
Now I received a 1099-R from Fidelity for that amount. It has $7361.58 in both Box 1 (Gross Distribution) and Box 2a (Taxable Amount), and Code E in Box 7. When I entered it as is into TurboTax 2021, it counts the number as taxable income. But I already paid the tax last year, when I included the amount as income in my tax return.
What am I supposed to do with it? @macuser_22 @J295 Please help.
