Retirement tax questions

If you received a 2022 401(k) excess deferral distribution in 2023, you'll receive a 2023 Form 1099-R with a distribution Code P in box 7; however, it must be included on your 2022 tax return. You have two options to do that:

1. Wait until next year when you receive the 2023 Form 1099-R and amend your 2022 tax return
2. Report it now on your 2022 return and ignore the 2023 1099-R when it comes next year
   • If your 2023 Form 1099-R has an amount in box 4, Federal tax withholding and/or box 14 State withholding, then you must enter it on your 2023 tax return. The 2023 Code P won’t affect your return, but the withholdings will be applied to 2023.

Select your choice below and follow the instructions.

Amend your 2022 tax return:

Sign in to TurboTax, scroll down, and open Your tax returns & documents

1. Select 2022, then Amend (change) return, then Amend using TurboTax Online
2. On the OK, let's get a kickstart on your 2022 amended return screen, select Adding or updating a tax form then Continue
3. On the Which one of these forms do you need to add to your return? screen, select 1099-R then Continue
4. Continue through the screens and answer all the questions

Report it on your 2022 tax return before filing:

If you haven’t filed your 2022 return yet and want to report a 2022 excess 401(k) deferral that was distributed in 2023:

1. Sign in to TurboTax and open or continue your return
2. Go to Wages & Income under Federal
3. Under Less Common Income, select Start or Revisit next to Miscellaneous Income, 1099-A, 1099-C
4. Select Start next to Other income not already reported on a Form W-2 or Form 1099
5. Answer Yes to Did you receive any other wages?, then Continue
6. Continue until you get to the Any other earned income screen. Answer Yes and select Continue
7. On the Enter Source of Other Earned income screen, select Other and Continue
8. On the Any Other Earned Income screen, enter 2022 Excess 401(k) Deferrals for the description, enter the amount, and select Done

For Tax Year 2023:

Your 2023 Form 1099-R form will be issued reporting the excess 2022 401(k) deferral you received as a distribution in 2023.

• You can ignore a Form 1099-R with code P in box 7 if you reported the excess as described above in 2022
• But, the earnings on Form 1099-R with code 8 in box 7 should be reported in 2023

If you don't take out the excess amount by the due date, you're taxed twice on the excess deferral left in the plan. This happens once when you contribute it and again when you receive it as a distribution. You can't include the excess amount in the cost of the contract even though you included it in your income.